Meta’s Early AI Strength Leads Bullish Analysts to Lift Stock Price Targets

Meta Platforms (META) shares rose Thursday after analysts lifted their price targets for the stock, citing positive signals surrounding the tech giant’s artificial intelligence (AI) opportunity.

Analysts said the company’s better-than-expected second-quarter results released Wednesday and the early AI gains, eased concerns about Meta’s increased spending to invest in the technology.

Meta shares were up 4.5% at $496.05 in recent trading, contributing to the stock’s nearly 40% year-to-date gain.

Second-Quarter Strength Eases Investor Worries

UBS analysts said “the most important development” from Meta’s earnings call was that it eased lingering uncertainty about the stock after AI spending worried investors after the company’s previous quarterly report.

The analysts said that the company’s third-quarter outlook indicates that Meta expects a strong second half of the year. They also said that CEO Mark Zuckerberg’s remarks gave investors more clarity on the company’s expectations for AI spending and monetization.

UBS on Thursday lifted its Meta price target to $635 from $630.

Meta told investors that its AI tech is improving its recommendation engines, offering early indicators that its significant capital expenditures (CapEx) in that direction are benefiting the company.

The company lifted the lower end of its outlook for full-year spending to $37 billion from $35 billion and said increased CapEx is expected in the next year.

Bank of America Securities analysts said that Meta’s “solid quarter and outlook suggest durable AI advantages.”

BofA, which calls Meta the “top AI play in consumer Internet,” raised its price target on the stock to $563 from $550.