Stock market today: S&P 500 ekes out closing record high despite wobble in chips
Investing.com -- MoffettNathanson reaffirmed its Buy rating on Meta and raised its price target from $605 to $810 per share in a note Tuesday, citing a stronger advertising outlook and weakening U.S. dollar as tailwinds for future earnings.
The analysts took a critical but measured look at the company’s artificial intelligence (AI) strategy and ongoing investments in Reality Labs.
“From 2019 to 2025, we estimate that Meta’s Reality Labs will have generated over $12 billion in aggregate revenues on the back of $100 billion in aggregate expenses,” MoffettNathanson wrote.
Despite the “-$88 billion in aggregate losses,” the firm noted that Meta’s stock has significantly outperformed the S&P 500 since rebranding from Facebook (NASDAQ:META).
“With all the whirlwind action that Meta’s CEO Mark Zuckerberg has recently taken to re-invigorate their GenAI product momentum, we once again find ourselves at another such jumping off point,” the analysts said.
They added, “While it hasn’t been wise or profitable to doubt the judgement of Zuckerberg, at some point, efficient markets start to ask about returns on invested capital.”
The firm said Meta’s core advertising business “will continue to generate enough earnings power to hold the market’s interest,” supported in part by AI enhancements.
As a result, MoffettNathanson raised its 2025 earnings and revenue forecasts and also increased its 2026 and 2027 revenue estimates to reflect “incremental gains from Meta’s AI investments.”
Still, the analysts cautioned that the long-term financial impact of Meta’s recent “zealous push into AI Superintelligence” remains unclear.
“To be clear, should macro conditions deteriorate or advertising growth slow, the market’s patience will likely be tested and as we saw in 2022, that might not be a pretty picture,” the firm said.