Meta Stock: Analyst Sees 71% Upside After Earnings Win – Here’s Why

TLDR

• Meta reported Q4 earnings of $8.88 per share on $59.89 billion revenue, beating Wall Street estimates of $8.23 per share and $58.59 billion.
• Rosenblatt Securities raised Meta’s price target to a Street-high $1,144, implying 71% upside potential.
• Meta’s capital spending jumped from $39 billion in 2024 to $72 billion in 2025, with projections of up to $135 billion for 2026.
• AI improvements led to a 3.5% increase in Facebook ad clicks and over 1% conversion gains on Instagram in Q4.
• Meta’s revenue grew 22% year-over-year in 2025 to $201 billion, with Q1 2026 growth potentially reaching 34%.

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Meta delivered earnings that topped expectations. The social media giant posted $8.88 per share on $59.89 billion in revenue. Wall Street had expected $8.23 per share and $58.59 billion.

Meta Platforms, Inc., META

Rosenblatt Securities responded by raising its price target to $1,144. That’s the highest on Wall Street. The firm kept its Buy rating on the stock.

Analyst Barton Crockett sees 71% upside from current levels. He pointed to Meta’s advertising business as a key strength. Revenue and margins both came in ahead of forecasts.

Meta is pouring money into AI. Capital spending nearly doubled from $39 billion in 2024 to $72 billion in 2025. The company plans to spend up to $135 billion this year.

That number exceeds the GDP of many small countries. When CEO Mark Zuckerberg first hinted at these spending plans in October, investors didn’t like it. Shares dropped 7% in after-hours trading.

This time around, the market reacted differently. Shares jumped 10% after Wednesday’s earnings release.

AI Investments Driving Revenue Growth

The difference comes down to results. Meta’s AI work is paying off in its advertising business.

CFO Susan Li said the company doubled its graphics-processing units for ad-ranking models in Q4. The team also adopted a new learning architecture.

These changes led to concrete improvements. Users clicked on Facebook ads 3.5% more often. Instagram saw conversion gains of over 1%.

Across Meta’s family of apps, conversions increased by 3%. That means more purchases, subscriptions, and leads for advertisers.

Revenue grew 22% year-over-year in 2025, reaching $201 billion. The company expects even bigger growth this quarter. Revenue could grow as much as 34%.

That’s massive growth for a company pulling in nearly $60 billion per quarter. Meta brought in 97% of its revenue from advertising in the December quarter.

Capacity Constraints and Future Plans

Meta says it’s capacity-constrained right now. The company doesn’t have enough infrastructure to do everything it wants with AI.

Li explained that demand for computing resources grew faster than supply. Meta expects to add capacity throughout 2026. But constraints will likely persist until new facilities come online later this year.

Zuckerberg told investors that current AI systems are primitive compared to what’s coming. He said Meta’s recommendation systems are already driving meaningful growth. But there’s more potential ahead.

On the advertising side, Meta is using AI to automate ad creation. Businesses can now generate video ads using AI tools. These video-generation tools hit a $10 billion revenue run rate in Q4.

Deutsche Bank analyst Benjamin Black sees Meta’s AI spending as a sustainable trend. He noted that the ad platform performs better with more computing power. That creates a structural advantage for Meta.

Rosenblatt highlighted rising productivity across the company. Efficiency gains, including stronger output from engineers, should help control costs. The analyst believes Meta can fund AI investments while generating solid free cash flow.

The consensus rating from 44 Wall Street analysts is Strong Buy. That’s based on 39 Buy ratings and five Hold ratings issued in the last three months. The average price target of $861.87 implies 16.74% upside.

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