HSBC has upheld its Buy rating on Meta Platforms Inc. (NASDAQ:META), fixing a price target of $905.00, signaling confidence in the company's trajectory despite current trading at $647.63. Analyst estimates for Meta's share value vary broadly from $685 to $1,117, reflecting a range of market expectations. Based on InvestingPro analysis, Meta's market valuation aligns closely with its Fair Value, as indicated by a price-to-earnings ratio of 28.56.
The investment bank highlights Meta’s early commitment and substantial financial backing in artificial intelligence technologies as key drivers for its advertising segment's success. AI capabilities have been instrumental in increasing user engagement and expanding advertising inventory, thereby contributing positively to the company's financial health. This strategic orientation is confirmed by Meta's impressive gross profit margin of 82.01% and a year-over-year revenue increase of 21.27%, per InvestingPro data covering the last twelve months.
While Meta does not lead in generative AI traffic when compared to specialized competitors such as OpenAI, Gemini, Deepseek, and Claude, HSBC notes the company’s primary aim remains the application of AI to optimize its advertising business rather than competing head-to-head in generative AI markets.
Looking forward, Meta projects a significant increase in capital expenditures for fiscal year 2026, surpassing the $32 billion rise anticipated for 2025, with market consensus expecting approximately $39.4 billion in growth. Additionally, the company anticipates overall expenses to accelerate, with projections indicating a 28% increase in 2026, up from a 23% growth forecast for 2025.
In recent developments, the sale of TikTok's U.S. operations to a consortium of primarily American investors, led by Oracle and Silverlake, has been approved by regulatory authorities in the United States and China. This transaction, expected to close imminently, marks a pivotal moment in discussions regarding TikTok's ownership.
Meta has remained a focal point for various financial analysts. Jefferies reiterated a Buy rating, emphasizing a favorable risk/reward balance and pointing to potential outperforming opportunities relative to competitors like Alphabet. Truist Securities also sustained its Buy rating despite reservations about Meta’s capital and operational spending plans and AI performance. Meanwhile, TD Cowen increased its price target on Meta to $820, reflecting anticipated gains in digital advertising market share for platforms such as Facebook and Instagram. Furthermore, Meta’s head of global business highlighted concerns about European regulatory frameworks potentially restricting AI progress, underscoring ongoing industry challenges.