Meta Platforms Inc. (Meta (META)) shares edged up nearly 1% on Monday, riding a broader wave of buying in mega-cap tech stocks. The Nasdaq climbed about 1%, and the S&P 500 added 0.37%. But the real action is forward-looking: investors are already turning their attention to Meta's July 29 earnings report, and Bank of America is feeling optimistic.

BofA reiterated its Buy rating and $835 price target on Meta, arguing that healthy advertising demand and expanding AI monetization could support upside. The firm raised its second-quarter estimates, now calling for revenue of $60.6 billion and earnings of $7.50 per share—above Wall Street's consensus of $60.2 billion and $7.18, respectively.

According to BofA analysts, ad demand stayed robust during the quarter despite macroeconomic uncertainty. Favorable foreign exchange trends and lower headcount from Meta's workforce reductions also provide tailwinds for earnings. For the third quarter, the firm expects Meta to guide revenue in the range of $60.5 billion to $63.5 billion. It also thinks Meta could narrow the upper end of its full-year expense outlook due to recent layoffs, though higher memory costs might push full-year capital expenditure guidance to between $135 billion and $150 billion, up from the current $125 billion to $145 billion range.

AI Monetization: The Big Catalyst

Bank of America says investor attention during the earnings call will likely center on Meta's ability to generate returns from its massive AI investments. The analysts highlighted several potential catalysts: licensing Meta's AI models, expanding Business Agent products, subscription offerings, and leasing excess AI computing capacity to third parties.

Following reports that Meta could lease computing capacity to Anthropic, BofA added $5 billion of estimated AI compute revenue for 2027 and $11 billion for 2028. Those changes boosted its 2027 revenue forecast to about $316 billion and raised its 2027 earnings estimate to $35 per share. The firm also expects investors to seek updates on Meta's custom AI chips, infrastructure efficiency, AI coding tools, and the roadmap for advanced large language models. Greater visibility into AI monetization, BofA argues, could support a higher valuation.

Valuation: Still a Bargain?

Despite Meta's strong performance, BofA contends the stock still trades at an attractive valuation. The brokerage estimates Meta trades at about 19 times expected 2027 GAAP earnings, below its roughly 10-year average multiple of 21 times. The market, BofA says, still underappreciates the long-term earnings potential from AI-powered advertising improvements, new AI-driven businesses, and future cost savings from Meta's custom silicon strategy.

Earnings and Analyst Outlook

Meta is scheduled to report second-quarter results on July 29. Wall Street expects earnings of $7.18 per share, up from $7.14 a year earlier, on revenue of $60.22 billion, compared with $47.52 billion last year.

The stock carries a consensus Buy rating with an average analyst price target of $809.76. Recent analyst actions include:

• Wedbush maintained Neutral with a $671 price target on July 16.
• UBS maintained Buy and lowered its price target to $766 on July 13.
• Citizens maintained Market Outperform and lowered its price target to $800 on July 10.

META Stock Price Activity: Meta Platforms shares were up 0.92% at $651.98 at the time of publication on Monday, according to market data.