It has been a busy time for tech traders as 4 of the “Magnificent 7” constituents — specifically Microsoft (MSFT), Apple (AAPL), Meta Platforms (META), and Tesla (TSLA) — just lately launched their December quarter earnings. The market’s response to the earnings has been somber as traders query rising synthetic intelligence (AI) capital expenditures.
Microsoft and Meta Platforms are two tales in distinction, although. Whereas the previous noticed a double-digit dip on Jan. 29, Meta Platforms soared by the same quantum and rose above $700. Notably, META inventory beforehand fell under $700 following the corporate’s third-quarter 2025 earnings launch in October and traded under that stage till This autumn earnings turned the tide.
With this current momentum in thoughts, is $1,000 per share an inexpensive expectation for META inventory subsequent? Let’s take a better have a look at the dangers and alternatives traders ought to pay attention to in the case of Meta Platforms.
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Meta’s digital advert enterprise, which accounts for practically all of its revenues, has been doing remarkably effectively. Trying forward, Meta Platforms expects to monetize Threads and WhatsApp additional. The corporate is increasing advertisements on Threads to all remaining international locations and can step by step roll out advertisements on Standing in WhatsApp. Paid messaging in WhatsApp is one other progress driver for Meta, and the enterprise is now operating at an annual income run charge of over $2 billion.
Instagram Reels, which was launched to tackle TikTok, continues to indicate robust traction as effectively. Meta mentioned that, in This autumn, complete watch time on the platform rose 30% year-over-year (YOY) in the US. The corporate plans so as to add extra languages to the video dubbing characteristic on Instagram, which might assist additional drive engagement and, by extension, revenues. AI would additionally assist Meta additional improve the efficacy of advertisements by making them much more focused.
Meta Platforms’ foray into {hardware} with AI glasses might probably be one other main progress avenue. Nevertheless, Actuality Labs continues to stay a drag on the corporate’s funds. The section posted an working lack of over $6 billion in This autumn. The section additionally misplaced $19.1 billion final yr, whereas cumulative losses since 2020 have topped $80 billion.
Actuality Labs is now specializing in glasses and wearables after having just about given up on the metaverse — the challenge after which Meta had renamed itself from Fb in 2021. For 2026, Meta Platforms expects the section’s losses to be “comparable” to final yr. Moreover, CEO Mark Zuckerberg mentioned that Actuality Labs’ losses would “possible peak” this yr.
Whereas Meta Platforms’ revenues are rising at a brisk tempo, the agency can be witnessing a steep rise in each working bills and capex. For 2026, Meta forecast complete bills to be between $162 billion and $169 billion. On the midpoint, the determine is 42% greater than final yr. Meta’s 2026 bills are anticipated to develop at a quicker tempo than its revenues, which might take a toll on margins. Nevertheless, the corporate nonetheless expects its 2026 working earnings in absolute greenback phrases to be greater than the earlier yr. We see the same development throughout virtually all different tech giants, that are seeing their bills swell amid the burgeoning AI investments.
Meta expects its 2026 capex to be between $115 billion to $135 billion, which is considerably greater than final yr’s capex of $72.2 billion. For 2026, Meta is optimistic about assembly the capex necessities by inner accruals. Nevertheless, the corporate touted the opportunity of “prudent quantities of cost-efficient exterior financing” to take care of its web money place. Whereas the corporate didn’t present a particular reply to this, it’d wrestle to generate sufficient free money flows this yr because it pours billions extra into constructing AI infrastructure. Rising AI capex would put strain on Meta’s stability sheet, which is in any other case fairly robust.
One other danger that Meta traders ought to be careful for is the clampdown on teenagers utilizing social media. Australia has taken the lead and banned youngsters underneath the age of 16 from utilizing social media platforms. France is subsequent in line, with the nation’s lawmakers approving a ban on social media for teenagers underneath the age of 15. The legislation is about to be efficient in September 2026, and extra international locations — notably in Europe — would possibly take the same stance.
Commenting on the clamor to bar kids from social media, Meta Platforms CFO Susan Li mentioned through the This autumn earnings name that the corporate is seeing “scrutiny on youth-related points.” Li added that there are “plenty of trials scheduled for this yr within the U.S., which can finally lead to a cloth loss.”
Wall Avenue analysts have been usually impressed with Meta’s This autumn earnings and upbeat Q1 steering, and a number of other raised their value targets on META.
Amongst main brokerages, Financial institution of America raised its goal value from $810 to $885. In the meantime, Cantor Fitzgerald raised its goal to $860 from $750 whereas Jefferies analyst Brent Thill expects META inventory to rise to $1,000.
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Meta’s core (non-AI) enterprise is doing remarkably effectively, and its revenues have grown by over 20% within the earlier two years, with consensus estimates calling for comparable progress this yr. No different “Magnificent 7″ inventory — barring what else however Nvidia (NVDA) — has achieved this feat. Nevertheless, Meta’s profitability is challenged, and the corporate’s 2026 per-share earnings are anticipated to be much like 2025.
META inventory trades at a ahead price-to-earnings (P/E) a number of of 24 instances, which isn’t unreasonable given the type of topline progress the corporate brings to the desk. The corporate’s profitability ought to enhance in 2027 and past as Actuality Labs losses (hopefully) slim whereas general expense progress moderates.
With all that in thoughts, I might wager on META hitting $1,000. If not this yr, the inventory could obtain that mark someday early subsequent yr as the corporate continues to indicate outstanding resilience in its core enterprise whereas persevering with to monetize WhatsApp and Threads.
On the date of publication, Mohit Oberoi had a place in: META, MSFT, AAPL, NVDA, TSLA. All info and knowledge on this article is solely for informational functions. This text was initially printed on Barchart.com
