Meta Platforms (META) delivered a solid performance with its second-quarter earnings, prompting an analyst to raise both its revenue and earnings estimates for the parent company of Facebook, Instagram, and WhatsApp.
The company’s strong financial results and outlook for the third quarter reflect the significant potential of its investments in artificial intelligence (AI) and its growing strength in the digital advertising sector.
As a result, Bank of America (BofA) Global Research analysts Justin Post and Nitin Bansal just significantly raised their firm’s stock price target on Meta.
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Meta’s headline numbers easily beat estimates
Meta’s second-quarter revenue of $47.5 billion handily exceeded Wall Street’s consensus estimate of $44.8 billion, driven by a two-point constant-currency acceleration in advertising revenue growth to 22%. Meta’s GAAP operating income of $25.7 billion and earnings of $7.14 per share also each exceeded analysts’ expectations of $17.1 billion and $5.89 per share, respectively.
Image source: David Paul Morris/Bloomberg via Getty Images
Looking ahead to the third quarter, the analysts noted that guidance suggests higher AI investment spending, albeit supported by continued strong revenue growth as compared to Meta’s peers, with projected revenue ranging between $47.5 billion and $50.5 billion (up 17% to 24% year over year).
The high end of that range suggests a further 1% acceleration in constant-currency growth, fueled by an increase in user engagement, thanks to a combination of AI-driven content suggestions and an improvement in ad conversion rates.
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Meta’s AI investments continue to drive growth
Meta’s substantial investment in AI has proven to be a key factor behind its success in driving both user engagement and advertising revenue higher.
Indeed, recent posts from Meta CEO Mark Zuckerberg revealed plans to significantly ramp up AI spending, and guidance indicates an increase to Meta’s planned capital expenditures by $30 billion in 2026. A large portion of those investments will be directed toward AI personnel and infrastructure, the company says, as part of Meta’s overarching strategy to build advanced “superintelligent” AI systems that have the ability to self-improve over time.
Meta’s AI advancements are expected to open new revenue streams, including content creation, AI assistants, and even AI-powered devices.
However, risk remains in that if those AI investments fail to drive continued revenue acceleration over the next several quarters, there could be a slowdown in margin and EPS growth in 2026 that could negatively impact investor sentiment and cause valuation multiples to contract.
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On BofA’s raised price target range for Meta
For 2025, BofA increased its revenue estimates for Meta by 5% to $199 billion, and its EPS estimate by 11% to $29.73. Looking further ahead to 2026, it now anticipates Meta to deliver revenue of $237 billion, an increase of 9% from BoA’s previous models, with earnings of $32.63 per share, a 12% increase over previous estimates.
As such, BofA reiterated its buy rating and raised its per-share price target on Meta to $900 from $775 — with shares closing the week at just over $750 — representing an expanded 27x multiple of 2026 earnings per share (up from 26x previously).
Meta continues to be viewed as one of the top beneficiaries of the budding AI industry, particularly given its commanding leadership within the digital advertising space.
The company’s AI-driven ad engine is proving to be a durable and profitable asset, with the potential to continue to drive meaningful future revenue growth. New advertising capabilities, including integrations within Meta’s AI ad stack and platforms like Threads and WhatsApp, are widely expected to further bolster the company’s position in the market.
Related: Morgan Stanley revamps IBM stock forecast for 2026 after earnings
