Meta Platforms Inc. (NASDAQ: META) shares were nudging higher in Thursday's premarket, up nearly 1% as risk appetite firmed up ahead of the open. Nasdaq futures were up 0.56%, while S&P 500 futures gained 0.09%. The move comes as the Big Tech giant continues to scale its AI infrastructure and explore new ways to monetize artificial intelligence, all while trying to strengthen advertising growth, expand revenue streams, and eventually improve margins despite hefty capital spending.
Meta's AI Bet Could Pay Off Big, Says BNP Paribas
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Meta stock rises premarket as BNP Paribas sees 57% upside with an $855 price target driven by AI infrastructure growth.
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Jones Sees AI Driving Top-Line Growth
BNP Paribas analyst Nick Jones is feeling optimistic about Meta's prospects. He reiterated an Outperform rating with an $855 price target, implying about 57% upside from the stock's Aug. 18 price of $543.70. Jones argues that Meta's aggressive AI investments could generate "abundant revenue" over time, which would help justify the company's rising capital spending.
He sees durable growth in the core advertising business, complemented over time by subscription revenue, a potential cloud offering, and fees from letting external customers use Meta's AI models. Jones noted that Meta currently needs all of its computing capacity internally and doesn't expect excess capacity in the near term. Management views monetizing AI intelligence as financially more attractive than selling raw computing power. That said, Meta could offer cloud capacity if its internal requirements fall short of expectations, though management expects any such arrangements to remain short-term or strategic.
SMB Advertising Offers Another Growth Opportunity
Jones also highlighted Meta's opportunity among small and medium-sized businesses. Management believes AI-powered tools can help smaller companies create more personalized advertising at scale, potentially unlocking additional digital ad spending. Despite some macroeconomic pressures, Meta continues to see robust advertising demand.
Meta Builds Its Own AI Chips
In a notable development, Meta plans to begin manufacturing its internally designed Meta Training and Inference Accelerator (MTIA) chips in September. Currently, the company uses MTIA for inference workloads that improve recommendations and rankings, with plans to broaden its applications over time.
Jones Expects Profits and Margins to Improve
Jones expects Meta's capital expenditures to keep expanding through 2027, but he believes the investments will generate enough revenue over time to justify that spending. Meta management expects operating income to increase in dollar terms in 2026, although results may fluctuate from year to year. Combined with continued cost discipline, Jones expects margin expansion to resume as AI-driven revenue growth scales.
Analyst Consensus & Recent Actions
Meta Platforms carries a Buy consensus rating, with an average price forecast of $767.42. On July 30, UBS maintained a Buy rating and lowered its price target to $715. Baird maintained an Outperform rating and cut its target to $750, while Goldman Sachs maintained a Buy rating and lowered its target to $725.
Top ETF Exposure
- First Trust Dow Jones Internet Index Fund (NYSE: FDN): 9.46% Weight
- Natixis Loomis Sayles Focused Growth ETF (NYSE: LSGR): 7.99% Weight
- Invesco Nasdaq Internet ETF (NASDAQ: PNQI): 7.66% Weight
Significance: Because META carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Meta Price Action
Meta Platforms shares were up 0.73% at $550.00 during premarket trading on Thursday, according to market data.
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