Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) is “humming along” according to Wedbush analysts, who raised their price target on the stock to $750 from $610 following a better-than-expected first quarter and an upbeat revenue outlook for Q2.
Shares of Meta traded up 4.7% at $575 in the early afternoon on Thursday.
Wedbush reiterated its ‘Outperform’ rating after Meta delivered Q1 revenue of $42.3 billion, up 16.1% year-over-year and about 2% ahead of consensus.
Operating income of $17.6 billion surpassed expectations by roughly $2.2 billion, pushing margins to 41.5%, an improvement of 360 basis points year-over-year.
Wedbush noted that investor sentiment had turned cautious going into the results due to softening US ad demand, concerns over Chinese retailers pulling back, and a tough year-over-year comparison.
However, the Q1 results and Q2 revenue guidance, which calls for growth of 12.6% year-over-year at the midpoint, helped ease those concerns, they believe.
“Following results, we are increasingly constructive on the range of potential outcomes this year for Meta,” Wedbush wrote, highlighting upside from Meta’s ad business and AI monetization.
Higher investments
The firm also pointed to Meta’s updated 2025 capital expenditures (capex) guidance of $64 billion to $72 billion as a signal of strong underlying demand and commitment to strategic investments.
This is above the prior range of $60 billion to $65 billion and reflects continued infrastructure spend to support growth in AI-driven recommendations and advertising tools.
“Meta's more aggressive level of anticipated capex spend and slower pace of expense growth this year will likely alleviate some overhang on shares,” analysts wrote.
“We believe the higher level of investment is justified, as the infusion of AI capabilities across the company's ad stack and content recommendation engines are already driving tangible benefits for Meta's Family of Apps and Reality Labs.”
The analysts added that Meta is already seeing benefits from those AI investments. Time spent on Facebook and Instagram increased by 7% and 6%, respectively, over the past six months due to improved AI feed and video recommendations.
Wedbush believes the stock remains attractive at approximately 22x its revised 2026 GAAP earnings per share (EPS) estimate, with additional upside tied to monetizing Meta AI, now nearing 1 billion monthly active users.
The firm raised its estimates for both Q2 and full-year 2025, now forecasting 2025 revenue growth of 12.9% and an operating margin of 38%.