Meta Platforms (NASDAQ:META) raised its CapEx spending outlook after third-quarter financial results. Analysts are mixed on how the spending will help the company in the short- and long-term.
- META is feeling the pressure from bearish momentum. Get the scoop here.
The META Analysts: Bank of America Securities analyst Justin Post reiterated a Buy rating on Meta Platforms and lowered the price target from $900 to $810.
- Wedbush analyst Scott Devitt reiterated an Outperform rating and a $920 price target.
- JPMorgan analyst Doug Anmuth maintained an Overweight rating and lowered the price target from $875 to $800.
- KeyBanc analyst Justin Patterson maintained an Overweight rating and lowered the price target from $905 to $875.
- Needham analyst Laura Martin maintained a Hold rating with no price target.
- Rosenblatt analyst Barton Crockett maintained a Buy rating and raised the price target from $1,086 to $1,117.
Bank of America on META: Higher CapEx and one-time charges that led to missed earnings per share were negatives from the earnings report, Post said in an investor note.
The analyst said the AI opportunity is worth the wait and could lead to higher revenue.
"We see Meta in a position of strength with massive user network and opportunity to integration of compelling AI products over the next two years," Post said.
Post highlighted the company's advertising growth as a strength in the quarter.
"Meta's comments on forward year ad growth were quite bullish, and Meta noted revenue from automated ad tools has surpassed $60bn ARR and have significant room to grow."
The analyst said the bad news could already be priced into shares, while some product catalysts could help drive upside in engagement and revenue in 2026.
"We continue to see a much higher growth potential relative to the S&P 500 given a big AI opportunity ahead."
Wedbush on META: Higher expenses may have changed sentiment on Meta Platforms stocks, Devitt said in a new investor note.
"While the ultimate level of investment contemplated this year has increased, we believe the spending has been justified, with the infusion of AI capabilities across the company's ad stack and content recommendation engines driving tangible results," Devitt said.
The analyst said the report showed encouraging growth in the core advertising business, had positive commentary on Meta AI and showed momentum with the rollout of AI-infused hardware.
"We think the risk/reward is attractive given healthy fundamentals and optionality related to future AI monetization."
JPMorgan on META: Lower revenue growth guidance for the fourth quarter may have been expected, Anmuth said in a new investor note.
"Management is quite bullish on continued core AI improvements driving strong revenue growth in 2026, and likely beyond," Anmuth said.
The analyst said costs for Meta are outsized compared to Google and Amazon, as those companies have cloud businesses that help with Gen AI monetization.
"We will continue to give Meta the benefit of the doubt as core monetization is strong and we believe there is meaningful runway ahead, but the risk profile becomes further elevated."
KeyBanc on META: The third-quarter results have a resemblance to the third quarter of fiscal 2022 with high CapEx and OpEx growth leading to concerns about earnings and capital allocation, Patterson said in a new investor note.
The analyst said Meta AI and Advantage+ advertising should translate into "meaningful revenue and FCF) in future years.”
Patterson raises revenue estimates for fiscal 2025, fiscal 2026 and fiscal 2027.
"This reflects a healthy advertising environment and progress with AI initiatives," Patterson said.
The analyst lowers targets on earnings per share for fiscal 2025, fiscal 2026 and fiscal 2027 due to higher expense growth, leading to a lowered overall price target for the stock.
"We believe Meta is investing aggressively in AI, which should improve the core business and open up new opportunities over time."
Needham on META: The technology company could be asking public shareholders to "take on a quasi-government role of funding" generative AI research "for the good of humanity," Martin said in a new investor note.
"The CEO's 3Q comments prioritized open-source and universal access, committed to a large, front-loaded multi-year capex/opex for AI compute," Martin said.
The analyst said Meta shareholders should not "subsidize this strategy."
Rosenblatt on META: Third-quarter results were "great," with strong revenue growth and EBITDA, Crockett said in an investor note.
"The top-line ROI on these AI investments appears to support the spend," Crockett said of increased CapEx.
The analyst said AI is helping the company put more relevant content in front of its users, helping improve engagement times and potential monetization.
META Price Action: Meta stock is down 10% to $676.68 on Thursday versus a 52-week trading range of $479.80 to $796.25. Meta stock is up 13% year-to-date in 2025.
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