Morgan Stanley Boosts Meta Target Price 17% on AI Growth

On the eve of its earnings report, Morgan Stanley analyst Brian Nowak significantly raised the target price for Meta Platforms from $650 to $750, while maintaining an "overweight" rating. This adjustment comes as Meta's strategic focus on artificial intelligence (AI) has become a central theme in its upcoming financial report. The move underscores the growing importance of AI in Meta's business strategy and its potential to drive future growth.

The decision to increase the target price reflects a positive outlook on Meta's AI initiatives. Nowak's analysis suggests that Meta's investments in AI are expected to yield substantial returns, positioning the company favorably in the competitive tech landscape. The analyst's confidence in Meta's AI strategy is evident in the substantial increase in the target price, indicating a strong belief in the company's ability to capitalize on AI advancements.

Meta's AI efforts are not only aimed at enhancing its existing products but also at developing new revenue streams. The company has been actively integrating AI into its platforms, including Facebook, Instagram, and WhatsApp, to improve user experience and engagement. Additionally, Meta is exploring AI applications in areas such as virtual reality and augmented reality, which are expected to play a crucial role in the future of digital interaction.

The analyst's optimism is also supported by Meta's recent financial performance, which has shown signs of recovery and growth. The company's strong user base and robust advertising revenue continue to be key drivers of its financial success. With AI poised to further enhance these strengths, Meta is well-positioned to maintain its leadership in the social media and technology sectors.

Morgan Stanley has updated its valuation model to the mid-2026 period, highlighting that Meta's core growth engine—machine learning technology based on GPUs—will continue to optimize, effectively enhancing user engagement and monetization capabilities, thereby accelerating revenue growth. The firm emphasizes that Meta's performance in the second half of 2025 will hinge on two critical factors: the company's ability to demonstrate to the market that it can achieve its target of at least $30 per share in earnings by 2026, and the breakthrough reasoning capabilities of its new Llama model.

As Meta is set to release its earnings report on July 30, market attention is focused on the progress of its AI strategy. The firm particularly notes that the commercialization of generative AI products is crucial, as it will directly impact market assessments of the company's recent talent recruitment and capital expenditure investments.