We're Lifting Our Meta Price Target as Stock Soars 11%
The company's results left many in awe, but here's what really jumped out at us.
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We are increasing our price target on shares of Meta Platforms META to $850 from $725 as we reap the rewards of adding to the Pro Portfolio’s META position in April and May at much lower levels. The hike in our target reflects a combination of a few factors, including the company’s still expanding reach, advertising gains, and improving monetization efforts.
With trade tensions appearing to cool as trade deals are announced and other conversations are extended, the reduced uncertainty tied to an economy that is still expanding should foster more normalized advertising spend. In that environment, we continue to see Meta benefiting, especially as advertisers continue to shift increasingly toward digital platforms. They also want to tap the 3.48 billion in daily active people across all of Meta’s platforms vs. 3.27 billion at the end of June 2024.
While many were in awe of the company’s June-quarter top- and bottom-line beats, which were impressive, the year-over-year 500-basis point improvement in its consolidated operating margin was what really jumped out at us. We should see further improvement in the second half of 2025, but higher expenses will be a headwind as Meta invests further in AI capacity and talent. However, we see this as another instance of the company investing today to drive its business and profits higher in the coming quarters.
Part of that includes the further expansion of its ad platform to include WhatsApp and, to a larger extent, Threads, but also increasing AI’s role in automating and streamlining its larger advertising revenue stream. Per management, we are in the early innings of those strategies, and that suggests more benefits to come in subsequent quarters. We read that as greater profit and EPS dollars ahead, and that will keep us invested in META shares.
On the topic of the shares, today’s post-earnings move has vaulted their weighting to more than 4% of the Pro Portfolio’s assets. That means if we see the upward climb continue toward our new price target, we may opt to lock in some meaningful gains. While the path to our $850 target offers additional 10% upside, that potential, along with the shares knocking on the door of overbought territory, means keeping our Two rating intact, at least for now. As you saw in April and May, given the longer-term opportunity tied to META, we are not averse to adding more shares when the risk-to-reward tradeoff is in our favor.
Following Thursday’s more than 11% jump in the shares, we’ll have to revisit potential pickup points as we lift our META panic point to $625 from $600. Granted, that’s a bit wider than usual, but we have seen some wide swings in the shares since February.
On the capital spending front, while Meta tightened its 2025 capital spending budget to $66 billion-$72 billion, up $30 billion year over year at the midpoint, multiple comments pointed to continued investments in AI and related capacity. During the 2025 first half, Meta spent $30.7 billion, which means we will see a step up in H2 2025. We view that as positive for our positions in Nvidia NVDA, Marvell MRVL, and Eaton ETN.
Moving past H2 2025, Meta did not offer any specific 2026 capex figures, but it shared that it “expects another year of similarly significant capex dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our AI efforts and business.” More reasons for us to remain bullish on the three stocks above.
At the time of publication, TheStreet Pro Portfolio was long META, NVDA, MRVL and ETN.
