Bank of America is maintaining a Buy rating on Meta Platforms and keeping an $835 price target, arguing that clearer evidence of returns from the company's AI investments could prompt a re-rating of the shares.
The firm, speaking through analyst Justin Post, noted that Meta has underperformed since management warned of a substantial increase in operating and capital expenditures slated for 2026. Investors have been scrutinizing whether the surge in AI spending will produce adequate returns and whether the related rise in depreciation will weigh on margins.
BofA pointed to Meta’s growing compute infrastructure as the backbone for several company priorities. Those include the development of frontier AI models, enhancements to advertising technology and the pursuit of new business lines supported by AI capabilities.
According to the bank, AI is already contributing to Meta’s core advertising operations. Improved content recommendations and ad targeting are helping lift user engagement and ad spend, and further benefits could follow from integration of Muse Spark technology into the platform.
Despite these internal improvements, BofA said investors remain concentrated on two principal milestones that will likely dictate whether the stock can be re-rated higher. The first is demonstrable progress in frontier-level model development within the next nine months. The second is the scaled adoption of the new AI product suite across the user and business base.
The bank also highlighted the potential for new revenue streams tied to AI: subscription-based AI services, enterprise solutions and business agents. As those offerings move from concept toward public release, BofA expects the next two earnings reports to provide materially greater clarity on how AI monetization may unfold.
BofA summarized its view that a combination of stronger AI capabilities, broad product adoption, continued outperformance in advertising and the emergence of fresh revenue channels could restore investor confidence and underpin a higher valuation for Meta stock.
Additional context included in the original coverage
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