JPMorgan downgrades Meta on lack of AI product visibility

JPMorgan downgraded Meta Platforms (META) to Neutral from Overweight with a price target of $725, down from $825, following the Q1 report. The stock in premarket trading is down 9%, or $56.87, to $612.25. JPMorgan is “encouraged” by Meta’s 33% year-over-year revenue growth in Q1, supported by AI-driven advertising strength. However, the company’s increased infrastructure spending and lack of visibility into its AI product pipeline warrant a downgrade, the analyst tells investors in a research note. The firm believes Meta’s full-stack AI competition from Google and Amazon is intensifying. As such, Meta has a more challenging path to returns on its “heavy” AI capex beyond advertising, JPMorgan contends. It believes the shares could remain under pressure as investors look for greater clarity on Meta’s agentic products and how Muse models will help drive sales beyond advertising.