Wall Street stands by Meta even as costs rise and the stock sells off, cites AI leadership

Wall Street analysts are standing by Meta Platforms despite Thursday's sell-off. Shares of the Facebook parent sank more than 12% , a day after the company offered light guidance and highlighted plans to ramp up spending on artificial intelligence and mixed reality. The news stoked concerns around costs and Meta's spending while overshadowing a top-and-bottom line beat . Some Wall Street firms trimmed their price targets on the social media giant in the wake of the results but retained bets on the company's long-term potential as one of the top leaders in AI. Year to date, the stock has rallied 20% as investors continue to bet on those tailwinds. “Despite the heavy investments, we still project double-digit revenue & EPS growth in '25 & '26, & Meta has a strong track record of driving returns on increased spending,” said JPMorgan analyst Doug Anmuth. The analyst cut his price target to $480 from $535 a share, noting that building and creating new products is no easy — or quick — feat. The adjusted price target reflects nearly 3% downside from Wednesday's close. Meta Platforms is no stranger to betting on new technology. The company changed its name from Facebook in 2021 as it took a gamble on a metaverse vision. Not all of Meta's initiatives have been a success, with Deutsche Bank analyst Benjamin Black noting that boosted spending on Reels and Stories to keep up with competitors contributed to “near-term cannibalization of better monetizing, though aging surfaces/formats.” This time looks different as Meta works on “adjacent services” to complement its advertising model, Black said. Citi's Ronald Josey also noted that investments “come from a position of strength whereby Meta is a leader.” Elsewhere, Goldman Sachs analyst Eric Sheridan, who slashed his target to $500 a share from $555, highlighted management's strong track record of executing during past investment cycles. “We continue to see META as well-positioned against several long-term secular growth themes and are encouraged by the positive momentum across key product initiatives incl. Reels, click-to-messaging Ads and AI including Advantage+ adoption,” he wrote. Morgan Stanley analyst Brian Nowak retained his overweight rating and $550 price target, saying the firm remains “buyers through Meta's investments.” Ongoing investments and innovation should power engagement and monetization growth, he said. Meta isn't alone in this feat, with Nowak expecting competitors to undertake similar steps as more AI opportunities arise. While Bank of America's Justin Post expects this investment cycle commentary to weigh on sentiment in the near term, he sees signs that the company is putting money in the “right places.” “If there is anything META has proven over the years, it's extremely good at executing during big platform shifts in tech, arguably the best,” said Barclays analyst Ross Sandler. “We would let the dust settle on the tone shift here before adding to positions, but we didn't hear anything from [CEO Mark] Zuckerberg that causes major concern.” Sandler trimmed his price target to $520 from $550 a share as revenue growth rates decelerate, but he views the company as one of the top three leaders in AI and the top long-term name in the space. The adjusted target implies 5% upside from Wednesday's close.