Meta Platforms (META) may be stuck in a post-earnings slide, but one Wall Street firm says this is exactly the moment to lean in, not back away.
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Shares have plunged 19% since Meta reported mixed results on Oct. 28, a drop fueled by shrinking margins and yet another increase in planned spending on artificial-intelligence data centers. It’s the third time this year management has raised AI capex, a sign of how aggressively the company is pushing to compete at the frontier of model training and supercomputing.
The stock’s weakness hasn’t scared off Wedbush Securities. Quite the opposite. The AI-bullish firm added Meta to its “Best Ideas” list on Thursday, reiterated an Outperform rating, and stuck with its $920 price target, which is one of the highest on the Street.
Wedbush Says the Spending Spree Makes Sense
While many investors are balking at Meta’s ballooning costs, Wedbush argues those dollars are already producing meaningful returns.
“At this point in the cycle, we think the spending has been justified,” the firm wrote, pointing to improved ad performance, stronger recommendation engines, and early gains from Meta’s AI initiatives. Meta has aggressively hired top researchers from OpenAI (PC:OPAIQ), Anthropic, and Google (GOOGL) DeepMind, paying large sums to build out its supercomputing and model-development talent.
Meta stock ticked up 0.2% to $610 in early Thursday trading. Wedbush’s bull case hinges on the idea that Meta’s massive AI push, and products like its AI glasses, will widen the company’s long-term competitive moat.
Meta’s Valuation Looks Attractive after the Pullback
Even after investing heavily in supercomputing, Meta now trades at around 21x forward earnings, well below Alphabet’s 26x. Analysts say the recent selloff has reset expectations to a level that gives the stock “limited downside” from here.
D.A. Davidson analyst Gil Luria echoed the optimism, noting that Meta’s spending is “primarily coming in the form of compute and talent—both of which management believes are key to staying ahead of competitors.” His team kept an $825 price target and a Buy rating.
Is META Stock a Buy?
The stock of Meta Platforms has a consensus Strong Buy rating among 42 Wall Street analysts. That rating is based on 34 Buys, seven Holds, and one Sell issued in the last three months. The average META price target of $843.56 implies 38.5% upside from current levels.
