Wall Street Bets Big on Meta Ahead of Earnings

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•  26 Jan 2026
 

•   META  
   
  -0.15%

$META heads into its fourth-quarter earnings report, Wall Street is once again turning its full attention to the social media giant. Analysts are sharpening their forecasts, and one major investment house has upgraded the stock to “Buy” with a bold $900 price target, implying roughly 34% upside over the next year. Yet despite the optimism, investors remain cautious. The core debate is no longer about whether Meta can grow, but whether its massive AI spending will deliver measurable returns.

At the heart of the bullish case is Meta digital advertising machine. While artificial intelligence dominates headlines, analysts argue that Meta true structural advantage lies in its ability to match supply and demand in non-search advertising at scale. The company has built what some describe as an advertising factory where algorithms continuously refine targeting, optimize conversions, and improve outcomes for advertisers. Whether it is driving sales, generating leads, or increasing app installs, the system feeds on data and infrastructure that compound over time.

Meta currently controls an estimated 35% of the non-search digital advertising market outside China. Some projections suggest that share could approach 50% by the end of the decade, even if the broader ad market grows at a moderate pace. On that basis, revenue growth could average around 18% annually through 2028. For traders and long-term investors, that kind of sustained top-line expansion in a company already valued at approximately $1.69 trillion is difficult to ignore.

However, much of that advertising strength may already be reflected in the stock price. Shares have been relatively flat over the past 12 months, up just modestly, signaling that the market is waiting for a clearer catalyst. That catalyst, in many investors’ minds, must come from AI.

Meta has committed to approximately $71 billion in capital expenditures for 2025, with even higher spending expected in 2026. The bulk of that investment is directed toward data centers and AI computing infrastructure. For some shareholders, this raises concerns about a return to founder-driven, long-horizon bets without near-term financial visibility. The key question is not whether AI is important, but whether Meta can convert heavy spending into durable cash flow and margin expansion.

Management guidance in the upcoming earnings call will therefore be critical. Investors will scrutinize not only the size of operational and capital expenditures but also the timeline and expected return on those investments. Clear communication around monetization pathways whether through enhanced ad efficiency, AI-driven marketing tools for its 15 million active advertisers, or new revenue-generating products could significantly influence market sentiment.

On the enterprise side, Meta appears well positioned. Its vast advertiser base provides a built-in channel for AI-powered agent solutions that integrate directly into marketing workflows. This embedded demand may help justify the scale of infrastructure investment. On the consumer side, monetization is more complex. Text-based AI chatbots are unlikely to generate meaningful profits in the near term, but AI-generated video and content acceleration could increase engagement across Meta platforms. More content, produced faster and cheaper, could translate into higher user engagement and ultimately stronger advertising yield.

Other analysts maintain a cautiously constructive outlook. Some have slightly lowered price targets while retaining outperform ratings, anticipating that a new wave of AI-driven products could begin contributing meaningfully from 2026 onward. That forward-looking thesis suggests the current period may represent an investment phase rather than a profitability peak.

Meta earnings carry weight beyond a single ticker. As a major component of the Nasdaq and S&P 500, its performance often sets the tone for large-cap tech sentiment. A strong report with credible AI milestones could reinforce confidence in the next leg of the technology investment cycle. Conversely, vague guidance around spending and returns could reignite concerns about margin pressure across the sector.

Volatility around earnings may present short-term opportunity. For long-term investors, the decision hinges on conviction: is Meta AI buildout a disciplined infrastructure strategy tied to measurable advertising gains, or an expensive bet with uncertain timing?

Wall Street has placed its marker with a 34% upside target. Now the market is waiting for one thing clarity.

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