Guggenheim Lowers Meta Price Target to $700
Guggenheim analyst Michael Morris lowered the price target on Meta Platforms Inc.
(NASDAQ: META) to $700 (from $800) while maintaining a Buy rating.
“Meta delivered a modest revenue beat on 28% growth, but management failed to resolve the two sentiment overhangs going into the print: tangible AI monetization proof at scale and the trajectory and financing of the multi-year capex build.
Underlying operating margin compressed 620bps (ex-legal/severance charges), driven predominantly by 67% R&D growth from AI talent compensation and third-party AI token costs.
Beyond the ongoing (and compelling) core performance enhancements, management delivered only one specific commercial AI proof point: Meta Business Agent begins paid monetization on August 1.
The opportunity was framed as in the very early stages, similar to measured language used across other potential AI revenue vectors.
On capex, management explicitly declined to guide 2027, though noted spend plans are geared toward maximizing 2026-27 capacity with flexibility for growth in ’28 and beyond.
Capex in 2Q was below our estimate ($30.1B vs $35.5B est.) while the 2026 guide range was tightened to $130-145B (from $125-145B), implying a 2H26 quarterly capex pace of $40-47B, and a higher exit rate into 2027 than previously modeled.
Regarding financing, operating cash flow remains the primary funding pillar with continued investment grade debt issuance and infrastructure partnerships as supplemental sources.
We note that our current capex outlook ($200B annually in 2027/28) could be financed with current resources and forecasted operating cash flow, though management stated that all options remain under evaluation.
The 3Q26 revenue guide midpoint of $62.5B (+21.9% y/y) came in below consensus ($63.1B), though we note that the company has delivered top-line results above the high-end of guidance in six of the last ten quarters.
Management attributed the constant-currency deceleration to lapping 2Q25 impression growth tailwinds, the less-personalized ads offering in Europe, and continued integrity enforcement efforts.
While leadership remains positive on the opportunity ahead, the substance of the report and outlook reflected rising cost and capex, slowing topline, and legal overhangs.
Maintain BUY and lower 12-month price target to $700 from $800 as we lower our target multiple to 10.5x from 12x reflecting meaningfully higher stock comp and incremental model uncertainty.”
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