Meta Platforms (META.US) is back in favor after a nearly 20% correction, with shares rebounding almost 4% today. Jefferies reiterated its “Buy” rating, pointing to an attractive risk/reward profile following the pullback. Jefferies’ price target remains at $910, implying roughly 45% upside from recent levels. Zuckerberg’s company is still trading well below the Street’s highest target of $1,117.
Summary
- According to Jefferies, Meta is trading at a meaningful discount versus Alphabet—about an 8-turn gap on the P/E multiple—making the valuation relatively more compelling for a leader in digital advertising and AI.
- Fundamentals remain solid: Meta trades at around 27x trailing earnings and roughly 22x forward (12-month) earnings. The company also boasts a very high gross margin (around 82%) and remains one of the most profitable names across Big Tech.
- Jefferies argues that recent AI hiring and broader reinforcement of its AI teams should translate into tangible results in 2026, strengthening the company’s “core flywheel”—the mechanism that drives engagement and advertising performance across Facebook, Instagram, and WhatsApp.
- A key bull argument is that new monetization engines are only beginning to ramp. WhatsApp is viewed as having the potential to grow from an estimated ~$9bn run-rate today to as much as ~$36bn by fiscal 2029, with additional upside optionality coming from Threads and Llama/AI initiatives.
- Jefferies also notes that since earnings Meta is down roughly 18%, while Alphabet is up about 18% and Amazon about 4%—creating room for relative catch-up if Meta can ease investor concerns around margin pressure, higher capex, and AI execution.
- At the same time, the market is not ignoring the risks. The biggest one remains the scale of AI- and infrastructure-related CAPEX/OPEX, as investors want clear evidence that the strategy will translate into higher profits—not just higher costs.
- In the background, Meta’s strategic moves include headcount reductions in Reality Labs and the Meta Compute initiative, aimed at building a long-term advantage through computing capacity and supporting the development of next-generation AI products.
- The broader Wall Street takeaway is consistent: the market still “buys” Meta’s AI-first narrative, but it wants a better balance between the pace of investment and margin delivery. That will likely be the key yardstick over the coming quarters.
Meta Platforms (D1 chart)
Source: xStation5
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