Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB)'s third quarter earnings have been overshadowed by debate about the company’s ramping investment in its AI initiatives, with analysts at Wedbush, Jefferies, and Oppenheimer offering sharply differing takes on the company’s long-term trajectory.
Shares of Meta traded down 11.5% at about $665 amid investor concerns about Meta’s ballooning AI investments.
Wedbush remained upbeat, reaffirming its 'Outperform' rating and $920 price target, calling Meta’s heightened investment “justified” as it accelerates AI deployment across advertising and hardware.
“We believe the spending has been justified, with the infusion of AI capabilities across the company’s ad stack and content recommendation engines driving tangible results,” the firm wrote.
They added that Meta’s risk/reward profile remains “attractive given healthy fundamentals and optionality related to future AI monetization.”
Wedbush highlighted strong ad growth and a robust core business, noting Meta’s potential to monetize its Meta AI assistant across multiple commercial use cases.
Jefferies also maintained a constructive tone on Meta but flagged investor sensitivity to Meta’s growing capex. The firm described the quarter as a “solid print overshadowed by rising investment cycle.”
Meta’s fiscal 2025 capex guidance of $70 billion to $72 billion “appeared conservative,” but expect fiscal 2026 to be “notably higher.” Jefferies said the upcoming spending surge will “keep pressure on margins,” even as it sees upside to future revenue trends.
Oppenheimer, meanwhile, took a more cautious stance, downgrading Meta to ‘Perform’ from ‘Outperform’ amid what it called “uncertainty around AI investments.” The analysts drew parallels to Meta’s heavy 2021–2022 Metaverse spending.
Oppenheimer argued that while Meta’s Q3 advertising metrics were strong, “investors will struggle to rationalize the price-to-earnings ratio (P/E) until there is visibility into 2027,” especially as Google offers “predictable earnings at a reasonable P/E.”