Meta Heads Into Earnings With 29% Upside on Our Model

Meta Platforms (NASDAQ:META | META Price Prediction) is scheduled to report third-quarter results on October 21 after the close. Shares closed at $709.33. The 24/7 Wall St. price target for Meta is $913.41 over the next 12 months.

 

Our model has high confidence in this call. Meta’s ad engine is still growing at close to 30% a year, and that growth matters more to the model than the margin hit from AI spending. The upside is about twice what Wall Street’s consensus target implies.

Meta Shares Recover After a Second-Quarter EPS Miss

Over the past week Meta slipped 1.3%, including a 3.72% drop on Friday. Shares are up 5.42% over the past month, roughly 6.7% over three months and 7.72% year to date. That leaves the stock about 9% below its 52-week high of $779.82.

Second-quarter revenue rose 27.96% to $60.80 billion, ahead of the $60.29 billion estimate. EPS came in at $6.18, short of the $7.22 consensus. That miss ended a six-quarter run of EPS beats. For the third quarter, management guided revenue to $61 to $64 billion.

Why Bulls See $1,046 Within Reach

Meta’s core ad business is still speeding up. In Q2, ad impressions rose 14% and the average price per ad climbed 12%. Advantage Plus, Meta’s automated ad product, has passed a $75 billion annual revenue run rate. More than 1 million businesses now use Meta’s AI business agents every week.

Zuckerberg told analysts, “The opportunity in front of us is massive.” Of the analysts covering the stock, 55 rate it a buy or strong buy, with their consensus target at $813.65. Our bull case reaches $1,046.27, a gain of 47.5%.

Capex and Courtrooms Could Cap the Upside

Meta plans to spend $130 to $145 billion on capital projects in 2026. Q2 free cash flow fell to $784 million from $8.55 billion, and long-term debt rose to $83.66 billion. That expansion has to be powered, cooled, and networked by someone, and we highlighted seven suppliers riding exactly that wave in a free AI infrastructure report.

Management has also warned that U.S. trials over youth safety could lead to material losses. One offsetting point: $2.40 billion in legal charges and $1.18 billion in severance hit the quarter, and both are one-time costs. Our bear case is $779.62, which is still above today’s price.

Meta Costs More Than Alphabet but Earns Higher Margins

The main rival to Meta for digital ad budgets is Alphabet (NASDAQ:GOOGL). Those earnings trade at 15x, but they include $99 billion in unrealized gains on equity holdings. On free cash flow, Alphabet costs 57x versus 34x for Meta.

Snap (NYSE:SNAP) competes with Meta for younger users and faces similar youth-safety lawsuits. Its revenue grew 18.9%, but its operating margin is negative. Taken together, the peer comparison makes our target look reasonable.

Meta’s AI Ad Engine Is Strong Enough to Justify Our Target

The 24/7 Wall St. price target is $913.41, with a buy rating at 90% confidence. Ad revenue growth near 30% is what tips the balance, more than offsetting the pressure from capex.

My view gets stronger if Q3 revenue comes in near the top of guidance and costs steady. I would turn more cautious if capex plans for 2027 rise again or the youth-safety trials go badly. On balance, the model sees more upside than risk.

These projections assume Meta keeps executing on its current AI strategy. Turning business agents into a real revenue line would drive results higher, while sustained legal losses would pull them lower.

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