Wolfe Research Lowers Meta Price Target to $700
Wolfe Research analyst Shweta Khajuria lowered the price target on Meta Platforms Inc.
(NASDAQ: META) to $700 (from $800) while maintaining an Outperform rating.
“Meta’s EPS call left investors wanting for more, especially as Ad revenue decelerates in H2 and CapEx remains elevated.
Specifically, no commentary on: a) timeline for generating incremental Rev. from renting excess capacity; b) framework for ROIC from new Rev. sources; c) capital raises vs. new JVs in the NT; d) framework on magnitude of Rev. or TAM of new monetization opportunities.
Management’s message implied ongoing, elevated CapEx through 2028.
That said, they provided some additional color on new & existing revenue lines which included: a) Core business strength driven by LLM-native rec systems, improved ROAS, new content, and products shipped faster; b) Personal AI agents for consumers; c) Business AI agents & API plug-ins for SMBs and Enterprises; d) Selling compute + new Enterprise products.
It now becomes an execution story. We are raising our ’27 CapEx to $233B, implying 6-7GW of new capacity, and expect Meta to raise $50 – $100B over the next 3 – 18 months.
Q2 Revenue of $61B came in 1% above the Street, with 14% impressions growth and 12% pricing growth. OI of $22B (ex-one time costs) came in above the Street. Q3 revenue guide of $64B at high-end (vs.
Street at $63B) came largely in line with investor expectations. Management narrowed CapEx and OpEx guides.
Meta’s fundamentals remain healthy but spend against current revenue seems unjustifiable until we see more evidence.”
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