Meta is one of the companies kicking off this week’s mega-cap earnings Super Bowl.
Facebook’s parent company is scheduled to report first-quarter results after the close of trading on Wednesday, and Wall Street has high expectations for its AI-powered growth.
The company is one of the biggest spenders in the AI race and has been in the spotlight in recent weeks. In early April, the company released its long-awaited AI model, Muse Spark. Shortly after, the company announced it planned to lay off 10% of its workforce to cut costs and make room for “investments” like the $115 billion it earmarked for AI-focused capital spending this year.
The move comes at a volatile time for the AI industry, which has been rocked this year by high valuations and concerns about how artificial intelligence will disrupt business models across the industry. Broader concerns about war with Iran have also led to a surge in tech stocks over the past month.
Analysts expect the company to report revenue of $55.51 billion and earnings per share of $6.65 for the quarter.
Here’s what Wall Street is looking for heading into Mehta’s conference call with investors
Bank of America: Optimistic about Muse Spark
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BofA analysts said they were optimistic about Muse Spark’s performance and potential benefits, especially because the AI model was deployed faster than originally expected.
“Previous reports indicate that Meta has delayed the model’s launch to at least May, and we believe an early release will help eliminate the overhang of stock price uncertainty. Meta has outlined a roadmap for significantly improved LLM capabilities throughout the year, suggesting scope for iterative performance improvements,” BofA said of the upcoming model.
The bank noted how Google sees a “significant improvement in sentiment” following the progress of its Gemini 3.0 model.
“If model performance continues to improve, Meta could be on a similar trajectory over the next 12 months,” BofA said. “We believe current valuations are attractive given the significant AI opportunity outpacing industry advertising growth and AI’s strong financial position.”
Analysts reiterated Meta’s Buy rating and set a price target of $885, implying a 32% upside from the stock’s current levels.
Goldman Sachs: Strong growth, but capital investment requires caution
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Goldman analysts also see strong growth prospects for Meta, citing restraint in the company’s advertising business. However, given the uncertainties surrounding the geopolitical and economic environment, investors called the company’s prospects “low outlook.”
The bank said it is keeping an eye on Meta’s updated guidance on accounting expenses and total annual capital expenditures, especially in light of recently announced job cuts. He also expressed optimism for Muse Spark.
“Over time, we continue to believe that there is scope for efforts related to the Meta Superintelligence Lab to reintegrate the company into the competitive framework for (at least) consumer AI adoption and possibly expansion into use cases,” the bank wrote.
Goldman reiterated its Buy rating on Meta, with a price target of $840, implying a 25% upside from current levels.
JP Morgan: AI advertising will be the driving force
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Analysts at JPMorgan said the Facebook parent company is expected to see “strong” growth this year, with first-quarter revenue potentially up 30% year over year, primarily due to “continued improvements in core AI advertising.”
While Meta’s heavy spending on AI shows no signs of “easing,” the company appears to be maintaining “financial guardrails,” the bank said, adding that the company’s unchanged capex outlook for this year is likely a bullish catalyst.
“Muse Spark is beginning to move toward the frontier of personal superintelligence, but continued progress is needed,” the analysts added about the outlook for AI.
The bank reiterated its rating on Meta as “overweight” and set a price target of $825, implying a 23% upside from current levels.
Truist: On track for strongest growth in five years
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Trust said it expects meta sales to increase 31% year-over-year in the first quarter, marking the company’s strongest growth since 2021.
The increase will primarily be driven by significant user growth at the company and “improved monetization” as Meta integrates AI across its marketing and consumer engagement projects.
The company also added that it could catch up with the LLM competition after the latest launch of Muse Spark.
“Despite near-term investor concerns over high CapEx and Gemini’s recent rise to the top of AI model rankings, META continues to be a major player and beneficiary of AI improvements, which it has thus far leveraged to unlock better ranking and recommendation models, improve ad targeting and efficiency, and drive spending on the platform,” Truist analysts said.
“We think Meta stock is compelling at current levels,” they added.
Trust reiterated its buy rating on the stock and set a price target of $900, suggesting a 34% upside.
Wedbush: AI flywheel effect
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Mr. Wedbush said he is poised for further strong results. Analysts said investors underestimated the “flywheel effect” of Meta’s AI advertising monetization, which should boost Meta’s profits.
In an earlier memo, the company mentioned plans to reduce headcount by 10%, adding that it was “encouraged” by Meta’s cost-cutting efforts.
“In our view, this print will confirm that Meta is one of the cleanest AI monetization stories in Big Tech, where AI capital expenditures translate directly into measurable ad revenue growth quarter-on-quarter,” the analyst added on the outlook.
The company reiterated its “outperform” rating and $900 price target, implying a 34% upside from current levels.