On December 18, BofA Securities reaffirmed its “Buy” rating for Meta Platforms, Inc. (NASDAQ: META), setting a price target of $810.00. This decision comes as the market’s concerns surrounding artificial intelligence (AI) spending begin to ease, providing a more favorable outlook for the tech giant.
Despite experiencing recent fluctuations that have seen its stock underperform compared to the broader market, BofA remains optimistic about Meta’s potential. The firm highlighted that while Meta has lagged behind key competitors, such as Alphabet, analysts have raised the company’s earnings estimates for 2026.
Market Performance and Future Outlook
Year-to-date in 2025, Meta’s stock has seen a modest increase of 11%. In contrast, the NASDAQ index has grown by 18%, and Alphabet’s shares have surged by 56%. Analysts noted that even with a 16% increase in consensus earnings per share (EPS) estimates for 2026, the price-to-earnings (P/E) multiple contracted during the second half of 2025 due to deteriorating sentiment around AI investments and rising operational expenses.
Despite these challenges, BofA identifies several near-term catalysts that could drive positive momentum for Meta. The firm pointed to the company’s expense guidance for 2026 and the anticipated launch of large language models (LLMs) in the first half of the year as key factors that may enhance investor confidence.
Investment in AI and Advertising
Investors are particularly focused on how investments in AI will impact returns across Meta’s core applications, advertising monetization, and potential new business ventures. BofA’s analysis suggests that management’s insights into the costs associated with developing LLMs versus relying on licensing agreements could play a significant role in shaping market sentiment moving forward.
“Given Meta’s significant investment in LLM development (without a licensing revenue model), we think management commentary on LLM build cost vs. licensing, and the long-term benefits of an in-house LLM could be helpful for sentiment,” BofA stated in its report.
Meta has continued to expand its advertising capabilities while investing heavily in AI and the metaverse. The firm’s commitment to these areas reflects a strategic push to enhance its market position amid evolving industry dynamics.
While some analysts express caution regarding Meta as an investment, BofA’s conviction lies in the belief that certain AI stocks, including Meta, hold promise for significant returns in the near term. Investors seeking opportunities in the AI sector may wish to explore various options, with Meta being a notable player.
As the technology landscape evolves, the performance and strategic decisions of companies like Meta will continue to attract attention from investors and market analysts alike. The upcoming months will be critical for assessing how effectively Meta can leverage its investments in AI and advertising to drive future growth.
