A leading market watcher is taking a closer look at the social media giant’s spending. On Thursday, KeyBanc analyst Justin Patterson kept his Buy rating on Meta Platforms (META) but cut his price target to $760 from its previous level of $855.
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Even with this lower number, Patterson still sees a big 24% jump for the stock from its current price of $612. The change comes as Meta launched its new Muse Spark model yesterday, ahead of its April 29 earnings. However, Patterson focused his April 9 report on the high costs of Llama 4 infrastructure and his new $760 price target.
Meta Invests Heavily in the Llama 4 Era
Patterson’s new report focuses on how much it costs to stay ahead in the AI race. Meta is currently building massive computer centers to power its Llama 4 model. While this keeps Meta as a leader, the high price tag for all that equipment is the main reason for the lower target today.
“Meta’s clear progress in its AI initiatives continues to justify a premium valuation over its peers,” Patterson noted in today’s report.
Patterson believes that while the spending is high, it is working. He pointed out that AI is already making ads on Instagram and Facebook more effective. He thinks the current stock price is an “attractive entry point” for people who want to own a piece of the top AI company for the long haul.
New Ways to Make Money Are Opening Up for Meta
KeyBanc is also looking at how Meta can make more money from the billions of people who use its apps every day. Patterson thinks the company is just starting to tap into the potential of its messaging services.
Patterson pointed out in today’s report that Meta has the chance to “leverage its AI advancements to create new revenue streams” and “enhance monetization strategies for its messaging platforms.”
Investors Prepare for Noisy Earnings
The lower $760 target is a sign that the market might be a bit nervous about the next few months. Patterson warned that the company’s profit growth might look a bit messy as it pays for all its new data centers and AI chips.
Patterson concluded that while near-term spending is high, Meta is successfully “using AI to build a moat” that protects it from other companies.
KeyBanc is signaling to investors that the big picture still looks good by keeping a Buy rating. Patterson believes the stock will eventually climb toward that new $760 goal as long as Meta can show that its AI tools are helping it sell more ads.
What Is the Price Target for Meta?
Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 39 Buys, six Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average META price target of $859.68 per share implies 40.4% upside potential.
