Meta Platforms, Inc. (NASDAQ:META) is one of the AI Stocks on the Market’s Radar. On December 18, BofA Securities reiterated its “Buy” rating on the stock with a price target of $810.00. Despite the recent multiple compression, the firm is constructive on the stock driven by key near-term catalysts.
BoFA noted how Meta has lagged the broader market and some of its biggest peers despite analysts having raised Meta’s 2026 earnings estimates. Investors have grown cautious on the stock amid concerns about AI spending and rising operating costs.
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“2025 YTD, Meta stock (up 11% y/y) has underperformed the NASDAQ (up 18%) and Alphabet (up 56%). Although Meta’s 2026 consensus EPS estimates increased 16% from the start of 2025, the 2026 P/E multiple contracted in 2H’25 as AI sentiment deteriorated and 2026 Opex concerns grew.”
Despite these concerns, the firm finds Meta’s 2026 expense guidance and LLM launch in the first half of 2026 as potential near term catalysts. Looking ahead, investors will remain focused on AI investment spend and the returns these investments may generate across core apps, advertising monetization, and new business opportunities.
The firm also mentioned in their investor note how management’s commentary regarding costs to build LLMs compared to licensing can help improve sentiment.
“Given Meta’s significant investment in LLM development (without a licensing revenue model), we think management commentary on LLM build cost vs. licensing, and the long-term benefits of an in-house LLM could be helpful for sentiment.”
Meta Platforms has been expanding its advertising capabilities and also invests heavily in artificial intelligence and the metaverse.
While we acknowledge the potential of META as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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