Meta Platforms Inc. (NASDAQ:META) stock traded higher by almost 1% during Thursday’s premarket session as risk appetite firms up into the open. Nasdaq futures are up 0.56% while S&P 500 futures have gained 0.09%.
The Big Tech giant is scaling its AI infrastructure and developing new ways to monetize artificial intelligence as it looks to strengthen advertising growth, expand revenue sources and eventually improve margins despite elevated capital spending.
Jones Sees AI Driving Top-Line Growth
BNP Paribas analyst Nick Jones expects Meta to continue delivering robust revenue growth as it monetizes its AI investments.
The analyst reiterated an Outperform rating on Meta with an $855 price forecast, implying about 57% upside from the stock’s Aug. 18 price of $543.70.
He said Meta’s aggressive AI investments could generate “abundant revenue” over time, helping justify the company’s rising capital spending.
He sees durable growth in the company’s core advertising business, complemented over time by subscription revenue, a potential cloud offering and fees from allowing external customers to use Meta’s AI models.
Jones said Meta currently needs all of its computing capacity internally and does not expect excess capacity in the near term.
Management views monetizing AI intelligence as financially more attractive than selling raw computing power.
Meta could offer cloud capacity if its internal requirements fall short of expectations, although management expects any such arrangements to remain short-term or strategic.
SMB Advertising Offers Another Growth Opportunity
Jones highlighted Meta’s opportunity among small and medium-sized businesses.
Management believes AI-powered tools can help smaller companies create more personalized advertising at scale, potentially unlocking additional digital advertising spending.
Meta also continues to see robust advertising demand despite some macroeconomic pressures.
Meta Builds Its Own AI Chips
The company plans to begin manufacturing its internally designed Meta Training and Inference Accelerator (MTIA) chips in September.
It currently uses MTIA for inference workloads that improve recommendations and rankings, with plans to broaden its applications over time.
Jones Expects Profits and Margins to Improve
Jones expects Meta’s capital expenditures to continue expanding through 2027 but believes the investments will generate enough revenue over time to justify that spending.
Meta management expects operating income to increase in dollar terms in 2026, although results may fluctuate from year to year.
Combined with continued cost discipline, Jones expects margin expansion to resume as AI-driven revenue growth scales.
Analyst Consensus & Recent Actions: Meta Platforms carries a Buy consensus rating, with an average price forecast of $767.42.
On July 30, UBS maintained a Buy rating and lowered its price forecast to $715. Baird maintained an Outperform rating and cut its price forecast to $750, while Goldman Sachs maintained a Buy rating and lowered its price forecast to $725.
Top ETF Exposure
- First Trust Dow Jones Internet Index Fund (NYSE:FDN): 9.46% Weight
- Natixis Loomis Sayles Focused Growth ETF (NYSE:LSGR): 7.99% Weight
- Invesco Nasdaq Internet ETF (NASDAQ:PNQI): 7.66% Weight
Significance: Because META carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Meta Price Action
META Stock Price Activity: Meta Platforms shares were up 0.73% at $550.00 during premarket trading on Thursday, according to Benzinga Pro data.
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