Morgan Stanley named Meta Platforms a top pick with a $775 price target, projecting $10 billion in annual revenue from its AI chatbot. The call comes as Meta shares have fallen 25% from their August 2025 high, erasing about $500 billion in market value amid investor concern over $600 billion in planned capital spending.
Morgan Stanley named Meta Platforms a top pick with a $775 price target, projecting $10 billion in annual revenue from its AI chatbot. The call comes as Meta shares have fallen 25% from their August 2025 high, erasing about $500 billion in market value amid investor concern over $600 billion in planned capital spending.
Morgan Stanley named Meta Platforms a top pick with a $775 price target, projecting $10 billion in annual revenue from its AI chatbot.
"Meta still has 3.5 billion daily active users spending hours per day on the platform, along with a litany of GPU-enabled improvements in the pipeline," Brian Nowak, equity analyst at Morgan Stanley, said.
Nowak sees Meta AI monetization from less than a third of those users generating a single query per day driving $10 billion in annual revenue and 8% upside to his 2028 earnings estimate of $35.79 a share. Subscriptions could add another $7 billion in revenue and $2 of earnings growth, he said. The $775 price target implies roughly 30% upside from current levels.
Meta shares have fallen 25% from their August 2025 high near $800, erasing about $500 billion in market value, as investors question the return on a planned $600 billion in capital spending. The stock trades at 18.3 times forward earnings, the cheapest among Magnificent Seven peers.
The call puts Morgan Stanley against a backdrop of growing investor unease. Meta raised its full-year 2026 capital expenditure guidance to as much as $145 billion, up from a prior range of $115 billion to $135 billion, citing higher AI chip costs and data center expansion. The spending overshadowed a first-quarter earnings beat that saw revenue surge 33% to $56.3 billion and earnings per share jump 62% to $10.44. Operating income rose 30% to $22.9 billion, with margins holding at 41%.
Nvidia Chief Executive Officer Jensen Huang endorsed Meta's AI strategy this week, saying "nobody uses AI better than Meta" in a CNBC interview. Meta's Muse Spark reasoning tool has driven a 10% boost to time spent on Instagram Reels and an 8% lift for Facebook video, the best engagement figures in four years. Ad impressions rose 19% year over year while the average price per ad increased 12%.
Of the 55 analysts covering Meta, 43 rate it a strong buy and nine recommend holding, according to Koyfin data. The average price target of $823.53 implies a 37% upside. Rosenblatt holds the Street-high target at $1,015, while Citizens reiterated a market outperform rating with an $825 target.
The $775 target from Morgan Stanley sits below the consensus, reflecting what Nowak described as "lower visibility and confidence" in the timing of AI returns. He said creating a differentiated search agent across billions of users won't be easy given entrenched behavior around Google and other chatbots, but Meta's personalized data and distribution make the opportunity possible.
The stock's relative strength index stands at 41.61, indicating subdued momentum after the recent decline. Meta's next catalyst will be second-quarter earnings, with management guiding revenue between $58 billion and $61 billion. Consensus estimates project 2026 earnings per share of $29.35 before rising 19% to $35.01 in 2027.
This article is for informational purposes only and does not constitute investment advice.
