Why Wall Street Thinks Meta’s Best AI Days Are Still Ahead

TLDR

• Wells Fargo raised its Meta price target to $1,000 from $796, keeping an Overweight rating.
• The firm expects 2027 to be a “trough” earnings year as AI spending ramps up before bigger payoffs in 2028.
• Citi reiterated a Buy rating, noting Meta’s Muse assistant topped 6.6 million downloads in 16 days as the top app.
• Meta stock rose 0.2% to $743.01, up nearly 21% since Muse launched on September 8.
• Central Pacific Bank Trust Division boosted its META stake 65% last quarter, now worth about $5.2 million.

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Meta Platforms stock climbed 0.2% to $743.01 on Tuesday, pushing its gain since early September past 20%. The move comes as Wall Street digests two fresh analyst notes on the company’s AI bet.

Meta Platforms, Inc., META

Wells Fargo analyst Ken Gawrelski raised his price target to $1,000 from $796. He kept his Overweight rating in place.

But the note wasn’t all good news right away. Gawrelski expects 2027 to be a “trough” year for Meta’s earnings.

That’s because the company’s new AI assistant, Muse, won’t generate much revenue next year. Meanwhile, infrastructure costs keep climbing.

Gawrelski pointed to a $5 billion hit from lost capacity resales too. Meta needs that hardware for its own AI products now, not for renting out.

His advice to investors: look past 2027. He sees 2028 as the year AI revenue really stacks on top of Meta’s ad business.

Here’s a fun wrinkle. Gawrelski thinks Wall Street’s 2027 estimates are still too optimistic. He expects a reset once the slower timeline sinks in.

Wells Fargo compared the Muse rollout to Meta’s Reels pivot back in 2022. That shift moved users from posts toward short video, and it eventually paid off.

Citi Sees Early Momentum

Citi analyst Ronald Josey struck a more upbeat tone on Tuesday. He reiterated his Buy rating and $800 price target.

Josey highlighted that Muse has pulled in more than 6.6 million downloads. It’s been the most downloaded app for 16 straight days.

Citi expects Muse to eventually generate over $27 billion in revenue at scale. That’s the kind of number that gets a trading desk’s attention.

Despite the bullish notes, investors shrugged. Shares barely budged on the news.

Institutional Money Keeps Building

Away from the analyst desks, institutional investors are still piling in. Central Pacific Bank Trust Division raised its META stake by 65% last quarter.

The firm bought 2,817 more shares, bringing its total to 7,169 shares worth about $5.2 million. Several smaller funds, including Watchman Group and Penney Financial, also added to their positions.

Institutional investors and hedge funds now own nearly 80% of Meta’s stock. That’s a heavy concentration of professional money behind the name.

Meta’s average analyst price target sits at $787.86, per MarketBeat data. Targets range as high as $900, though one analyst has it as low as $700.

Insiders haven’t been buying, though. COO Javier Olivan and CEO Mark Zuckerberg both sold shares in September under pre-set trading plans.

Insiders have sold nearly $99.9 million in stock over the past three months. Roughly 13.5% of the company is still insider-owned.

Meta’s last earnings report, posted July 29, showed revenue of $60.80 billion. That beat estimates of $60.22 billion and marked 28% year-over-year growth.

Earnings per share came in at $6.18, missing the $7.19 consensus. Meta also pays a quarterly dividend of $0.525 per share, a yield of about 0.3%.

Shares opened Tuesday at $741.90, close to their 12-month high of $779.82.