Meta rallies after being named a “top pick” by Morgan Stanley
Meta is off to a strong start to the week after being named a new “top pick” of Morgan Stanley’s internet analysts.
Their case: the social media giant is cheap and commands an ever-increasing amount of eyeballs, which it’ll leverage to make money from its massive AI capex through nascent opportunities like agentic shopping and assistants.
“META sentiment has troughed due to GenAI ROIC and long-term positioning fears, and more recently macro ad market and regulatory question marks,” wrote analyst Brian Nowak. “In all, META now trades at ~15X our ’27 $36 EPS, 1 standard deviation below the long-term average, which creates a strong buying opportunity, in our view.”
Reported job cuts would also be “a bullish development” that boosts earnings, he added.
Even so, Nowak trimmed his price target on the stock to $775 from $825, which still represents upside of about 50%.
The hyperscalers have come under persistent pressure as investors remain reticent to bet that this capex binge will have a happy ending. Per The New York Times, Meta recently delayed the launch of its new model because of performance issues.
(That being said, the company’s latest earnings report did show that its ability to use AI tools to grow its top line remains impressive, even if its models aren’t best in class.)
