Meta Platforms Reports AI Investment Returns with Significant Ad Revenue Growth

Written by Emily J. Thompson, Senior Investment Analyst

META+0.42%

Source: Fool

Updated: 1h ago

0mins

Source: Fool

Stock Volatility: Following its third-quarter earnings report, Meta's share price plummeted 22% from $752 to below $600, reflecting investor concerns over the company's increased AI spending, especially in light of the significant losses from the metaverse.
Ad Performance Improvement: Despite challenges, Meta's ad impressions rose 14% year-over-year, and the average ad price increased by 10%, indicating that the integration of AI tools is enhancing ad effectiveness and generating more revenue for the company.
Revenue Growth: Meta reported total revenues of $42.3 billion, $47.5 billion, and $51.2 billion for the first three quarters of 2025, with year-over-year growth rates of 16%, 22%, and 26%, showcasing strong financial performance driven by AI investments.
Cash Flow Support: With $44.8 billion in trailing free cash flow, Meta is well-positioned to sustain its ongoing investments in AI, and while the metaverse has not yielded returns, AI could emerge as a key growth driver for the company moving forward.

Analyst Views on META

Wall Street analysts forecast META stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for META is 832.06 USD with a low forecast of 655.15 USD and a high forecast of 1117 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.

43 Analyst Rating

36 Buy

6 Hold

1 Sell

Strong Buy

Current: 661.500

Low

655.15

Averages

832.06

High

1117

Current: 661.500

Low

655.15

Averages

832.06

High

1117

Wedbush

Outperform

NULL

downgrade

$920 -> $880

2025-12-19

New

Reason

Wedbush

Price Target

$920 -> $880

2025-12-19

New

downgrade

Outperform

NULL

Reason

Wedbush lowered the firm's price target on Meta Platforms to $880 from $920 and keeps an Outperform rating on the shares. Meta is the firm's top advertising pick for 2026, supported by resilient digital ad trends, strong adoption of Advantage+, and monetization of new channels, the analyst tells investors in a research note. Margins are expected to contract next year, though additional cost discipline could provide upside, Wedbush says.

Morgan Stanley

Brian Nowak

Overweight

downgrade

$820 -> $750

2025-12-11

Reason

Morgan Stanley

Brian Nowak

Price Target

$820 -> $750

2025-12-11

downgrade

Overweight

Reason

Morgan Stanley analyst Brian Nowak lowered the firm's price target on Meta Platforms to $750 from $820 and keeps an Overweight rating on the shares. While the firm is "bullish" into 2026, it is lowering its FY26 and FY27 EPS estimates by about 8% each on the back of 5% and 6%, respectively, higher operating expense expectations and now models $33 of FY27 EPS, the analyst tells investors.

Morgan Stanley

Overweight

downgrade

$820 -> $750

2025-12-11

Reason

Morgan Stanley

Price Target

$820 -> $750

2025-12-11

downgrade

Overweight

Reason

Morgan Stanley lowered the firm's price target on Meta Platforms to $750 from $820 and keeps an Overweight rating on the shares. While the firm is "bullish" into 2026, it is lowering its FY26 and FY27 EPS estimates by about 8% each on the back of 5% and 6%, respectively, higher operating expense expectations and now models $33 of FY27 EPS, the analyst tells investors. Investor sentiment has turned negative, but Meta's revenue runway and innovation are "underappreciated," adds the analyst, who lays out a $1,000 per share "bull case" for the stock.

Mizuho

Outperform

maintain

$815

2025-12-04

Reason

Mizuho

Price Target

$815

2025-12-04

maintain

Outperform

Reason

Mizuho reiterated an Outperform rating and $815 price target on Meta Platforms, saying the firm sees a "significant rally ahead" for the shares. The firm recommends investors add to positions in light of multiple press reports that the company plans to cut up to 30% out of Metaverse spending and was asking managers to identify broader cuts across the company. Metaverse cuts of this magnitude could add roughly $2 per share to the firm's 2026 EPS estimate of $29.50, with Reality Labs losses of roughly $5.85 per share, the analyst tells investors in a research note. The firm suspects some of this development is incremental, but ultimately the plan to cut back in an area viewed as a black hohe alone should give investors more confidence the move to scale up investment in generative AI is not a blank check forever.

About META

Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.