Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) will soon report its second quarter earnings amid growing optimism from Jefferies analysts, who point to better-than-expected revenue trends, strengthening ad metrics, and continued long-term investments in AI.
The analysts upped their price target to $845 from $790, implying upside of 19% from current levels.
They also raised their Q2 revenue estimate by 3.1% and fiscal year 2025 estimate by 2.6%, implying 15.7% and 14.1% year-over-year growth respectively.
The analysts wrote that their revised Q2 estimate of $45.2 billion is at the high end of the company’s guidance and above the consensus of 14.2% year-over-year growth.
They see Meta’s quarter-over-quarter growth projection implying “rather conservative” growth of just 7%.
Capex to remain elevated
Capex pressures are expected to persist as Meta continues to scale infrastructure for AI, but the analysts are bullish on its long-term return on investment.
“We don't expect Meta to pull back much on its capex initiatives given the importance of AI,” they wrote, citing Mark Zuckerberg’s vow to “invest hundreds of billions of dollars into compute to build superintelligence.”
Jefferies now expects capital expenditures to reach $68.6 billion in 2025 and $74.2 billion in 2026.
Meta's aggressive AI build-out remains a double-edged sword for near-term margins, the analysts added.
“Meta has appointed Alexandr Wang, founder of Scale AI, as Chief AI Officer, alongside Nat Friedman, former GitHub CEO at Microsoft, several other high-profile AI researchers,” Jefferies wrote, calling it a strategic shift “to streamline its AI org and inject top-tier technical leadership following the underwhelming reception of Llama 4.”
However, the firm warned this could “very well pressure earnings, especially noting it invested $14.3 billion in ScaleAI.”
“While Reality Labs is beginning to show progress, it remains immaterial to revenue—yet Meta remains committed, recently investing $3.5 billion in ESLX,” they wrote.
Despite margin headwinds, fundamentals in Meta’s advertising business continue to improve. Jefferies highlighted “positive checks” on key metrics, including higher time spent on Instagram and stronger cost-per-thousand impressions.
“Ad checks indicated a rebound from April lows and improved sentiment, though macro uncertainty and tariff concerns remain,” they wrote.
Meta will report its second quarter earnings after markets close on Wednesday, July 30.