Meta Platforms shares surged on Thursday, adding nearly $100 billion in market value as analysts and investors delved into the details of the social media giant’s impressive second-quarter earnings. Meta (META), trailing only chipmaker Nvidia (NVDA) in year-to-date gains among the Magnificent 7 tech stocks, is now seen as the first megacap tech group likely to benefit directly from AI investment spending.
Why Meta is Leading the AI Charge
Meta is expected to allocate $37 billion to $40 billion in capital spending to AI this year, based on comments following its stronger-than-expected Q2 report. The company is already seeing a boost in both its ad-based revenue and broader product engagement from its 3.27 billion global active users.
KeyBanc Capital Markets analyst Justin Patterson, who increased his Meta stock price target by $20 to $560 per share, stated, “Meta’s 2Q print reinforced that the core business is seeing AI returns today while AI assistants and agents create returns over the medium term.” He added, “As AI creates more efficiencies for merchants around the world, we believe this can drive further share gains and support consistent 10%+ annual advertising revenue growth.”
Meta’s Impressive Earnings
Meta posted stronger-than-expected revenue of $39.1 billion for the three months ending in June, a 22% increase from the previous year. This growth was driven by “healthy global advertising demand,” supported by AI technology infusions. The company also forecasted current-quarter revenue between $38.5 billion and $41 billion, surpassing Wall Street estimates.
Zuckerberg’s Vision for AI
“I think we’re on track to achieve our goal of being the most-used AI assistant by the end of this year, and I think that’s a pretty big deal,” CEO Mark Zuckerberg told investors on a conference call. He added, “AI is going to end up affecting almost every product that we have in some way.”
Analysts’ Reactions to Meta’s Growth
UBS’s Lloyd Walmsley, who raised his Meta Platforms price target to $635 per share, highlighted the importance of the group’s “[generative-AI] monetization timeline and potential new products” from the earnings call. However, he also expects “a significant step up in [capital spending] for 2025” and a slight deceleration in ad revenue over the second half of this year.
JPMorgan analyst Doug Anmuth, who lifted his price target by $130 to $610 per share, noted that “Meta’s strategic investments in AI and infrastructure are setting the stage for long-term growth.” He emphasized that “GenAI will require significant infrastructure investments to train the next generation of large foundational models, and Meta is getting ahead of a multiyear capacity ramp.”
AI Driving Future Growth
Guggenheim analyst Michael Morris, who increased his Meta price target by $100 to $600 per share, said the group’s results and outlook “reinforce the bull case, showing that the company remains a critical destination for advertiser dollars.” He added, “Strong usage growth and continued AI investments position Meta well for future growth.”
AI and Digital Advertising
Mark Mahane at Evercore ISI, who raised his Meta price target by $50 to $600 per share, echoed these sentiments. He pointed out that “Meta’s Q2 results showed very strong ad revenue growth and significant margin expansion,” adding that “the company is effectively deploying AI to enhance consumer and advertiser experiences.”
Goldman Sachs analyst Eric Sheridan noted that while “debates will likely persist around product transitions and industry platform headwinds,” Meta’s “large scaled audience across their family of apps” remains compelling. Sheridan raised his price target by $33 to $555 per share, citing “positive momentum across Meta’s key product initiatives, including Reels.”
Meta’s Market Impact
Meta Platforms shares were marked 8.3% higher in premarket trading, indicating an opening bell price of $514.20 per share. This move would extend the stock’s year-to-date gain to around 45%.
Conclusion: Meta’s Strategic Position in AI
Meta’s impressive Q2 earnings and strategic investments in AI underscore its leadership in the tech industry. With analysts revising stock price targets upward, Meta is well-positioned for long-term growth. As AI continues to drive efficiencies and innovation, Meta’s focus on AI investment will likely yield significant returns, solidifying its place as a critical player in digital advertising and technology.
Learn more
- Meta Platforms: Link to Meta’s official site
- Nvidia: Link to Nvidia’s official site
- KeyBanc Capital Markets: Link to KeyBanc Capital Markets
- UBS: Link to UBS
- JPMorgan: Link to JPMorgan
