Meta Platforms Inc. (NASDAQ:META) stock rose nearly 1% on Monday as investors continued buying mega-cap technology stocks in a broader risk-on session. The Nasdaq is up almost 1% while the S&P 500 has gained 0.37%.
Attention is also shifting to the company’s July 29 earnings report after Bank of America said healthy advertising demand and expanding AI monetization could support upside.
Bank of America reiterated its Buy rating on Meta and maintained its $835 price forecast. The firm said improving ad demand, disciplined hiring and the potential to generate revenue from AI infrastructure could drive further upside.
Strong Advertising Trends Seen Driving Beat
Bank of America raised its second-quarter estimates and now expects revenue of $60.6 billion and earnings of $7.50 per share, above Wall Street expectations of $60.2 billion in revenue and $7.18 in earnings per share.
The analysts said advertising demand remained healthy during the quarter despite macroeconomic uncertainty. They also cited favorable foreign exchange trends and lower headcount following Meta’s workforce reductions as additional earnings tailwinds.
For the third quarter, the firm expects Meta to guide for revenue of $60.5 billion to $63.5 billion. It also believes the company could narrow the upper end of its full-year expense outlook because of recent layoffs, although higher memory costs could push full-year capital expenditure guidance to between $135 billion and $150 billion from the current $125 billion to $145 billion range.
AI Monetization Remains The Biggest Catalyst
Bank of America said investor attention during the earnings call will likely center on Meta’s ability to generate returns from its massive AI investments.
The analysts highlighted several potential catalysts, including licensing Meta’s AI models, expanding Business Agent products, subscription offerings and the possibility of leasing excess AI computing capacity to third parties.
Following reports that Meta could lease computing capacity to Anthropic, the firm added $5 billion of estimated AI compute revenue for 2027 and $11 billion for 2028. Those changes increased its 2027 revenue forecast to about $316 billion and raised its 2027 earnings estimate to $35 per share.
Bank of America also expects investors to seek updates on Meta’s custom AI chips, infrastructure efficiency, AI coding tools and the roadmap for advanced large language models, saying greater visibility into AI monetization could support a higher valuation.
Valuation Still Attractive, Says BofA
The brokerage argued Meta continues to trade at an attractive valuation despite its strong performance. It estimates the stock trades at about 19 times expected 2027 GAAP earnings, below its roughly 10-year average multiple of 21 times.
Bank of America said the market still underappreciates the long-term earnings potential from AI-powered advertising improvements, new AI-driven businesses and future cost savings from Meta’s custom silicon strategy.
Earnings And Analyst Outlook
Meta is scheduled to report second-quarter results on July 29.
Wall Street expects earnings of $7.18 per share, up from $7.14 a year earlier, on revenue of $60.22 billion, compared with $47.52 billion last year.
The stock carries a consensus Buy rating with an average analyst price forecast of $809.76. Recent analyst actions include:
- Wedbush maintained Neutral with a $671 price forecast on July 16.
- UBS maintained Buy and lowered its price forecast to $766 on July 13.
- Citizens maintained Market Outperform and lowered its price forecast to $800 on July 10.
META Stock Price Activity: Meta Platforms shares were up 0.92% at $651.98 at the time of publication on Monday, according to Benzinga Pro data.
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