Bank of America resets Meta stock price target following earnings

Meta Platforms (META) delivered a quarter that most businesses would be happy to take.

For perspective, Meta posted its Q1 earnings report on April 29, 2026, covering the quarter ended March 31, 2026.

The headline numbers impressed, delivering another double beat, with operating income coming in much stronger than expected. 

Unfortunately for the social media giant, Wall Street was focusing mainly on what’s ahead, particularly how it plans to continue building its AI future.

Shares dropped 8% to 9% post earnings, and are down more than 7% year to date, despite being up 14% this month, according to Seeking Alpha.

Nevertheless, Bank of America analyst Justin Post remained bullish. 

He reiterated a buy rating on Meta while raising his price target to $835 from $820 on the back of the tremendous strength of Meta’s core ad business and its growing AI opportunity.

The problem is that AI is expensive.

What overshadowed everything was Meta once again raising its capex to fuel its relentless AI buildout. Nevertheless, BofA backs the broader story, though it’s becoming a case of near-flawless execution.

Meta Q1 earnings at a glanceMeta Platforms blew past Wall Street expectations on both the top and bottom lines, posting a superb GAAP EPS of $10.44, which beat estimates by $3.78, while revenue rose 33.1% year over year to $56.31 billion.Advertising was the primary growth driver, with ad sales jumping 33% to $55 billion, while Family of Apps sales skyrocketed 34% to $55.9 billion.Meta guided for Q2 sales of $58 billion to $61 billion, with the midpoint of $59.5 billion most in line with market expectations. On top of that, it kept its full-year expense forecast unchanged at $162 billion to $169 billion, while lifting the capex outlook to $125 billion to $145 billion.Reality Labs remained a drag, losing a whopping $4.03 billion, while family daily active users slipped sequentially amid internet disruptions in Iran and WhatsApp restrictions in Russia.
Source: Seeking Alpha
BofA sees Meta’s AI spend paying off

Meta’s AI spending is massive, to say the least, but BofA analysts still feel the core business is strong enough to back it all up.

At the core of it, BofA believes AI-driven gains are translated into the company’s primary advertising engine, and will scale as large language models become more ingrained into the ad stack.

It’s important to understand that Meta isn’t spending into a weak business.

BofA sees 2026 revenue rising to $254.6 billion, with 2027 revenue climbing to $311.3 billion.

The rationale has three major parts:

Better ads: BofA expects deeper LLM integration, which improves ad performance while attracting more incremental ad spending.More shots on target: Threads, Meta AI, Marketplace, messaging, and subscriptions will create new monetization channels.Attractive valuation: At about 18 times revised 2027 GAAP EPS, Meta currently trades below its 21 times historical average.

The engagement numbers also help a ton.

BofA notes that AI-powered recommendations led to a 10% increase in time spent on Facebook, while total video watch time jumped more than 8% globally in Q1.

Consequently, BofA ended up raising its 2026 EPS to $34.12 and 2027 EPS to $34.46, which shows the company still sees Meta’s tremendous AI buildout as an investment, rather than a problem.

Meta earnings history

Meta’s recent earnings performance shows consistent beats across both lines, with sales hovering above 20% in each of the past four quarters.

That said, here’s how Meta has fared over the past four quarters.

FQ1 2026: EPS of $7.31 beat by $0.49, revenue of $56.31 billion beat by $755.41 million, and revenue grew 33.08% year over year.FQ4 2025: EPS of $8.88 beat by $0.70, revenue of $59.89 billion beat by $1.42 billion, and revenue grew 23.78% year over year.FQ3 2025: EPS of $7.25 beat by $0.58, revenue of $51.24 billion beat by $1.83 billion, and revenue grew 26.25% year over year.FQ2 2025: EPS of $7.14 beat by $1.28, revenue of $47.52 billion beat by $2.68 billion, and revenue grew 21.61% year over year.
Source: Seeking Alpha

Bank of America raises its Meta price target after earnings but flags heavy AI spending concerns ahead.

David Paul Morris/Bloomberg via Getty Images

Wall Street price targets for Meta Platforms stockJPMorgan cut its price target on Meta Platforms to $725 from $825.UBS lowered its price target on Meta Platforms to $865 from $908.TD Cowen cut its price target on Meta Platforms to $800 from $820.Bernstein lowered its price target on Meta Platforms to $850 from $900.Truist cut its price target on Meta Platforms to $840 from $900.Guggenheim lowered its price target on Meta Platforms to $800 from $850.
Sources: Benzinga, TipRanks
Risks still hang over Meta’s AI story

Though for the most part, BofA’s Meta call leans bullish, its long-term case (backed heavily by AI) comes with serious risks.

The first and most obvious concern is spending.

Meta Platforms just raised its capex to $125 billion-$145 billion, with BofA estimates at $130 billion for the year.

For more color, according to GuruFocus, Meta’s capex-to-operating-cash-flow ratio is 0.59, 48% higher than its 10-year median of 0.40.

That level of investment works if AI continues improving engagement and ad performance, but also raises the bar for returns. 

The second aspect to consider is flexibility.

Meta still gets roughly 98% of its sales from digital ads, while we’re seeing its fixed cost jump due to AI infrastructure and data centers.

Supporting that is the fact that Meta stock is trading at 5.72 times its forward book value (showing how asset-heavy a business is), which is 201% higher than the sector median. 

So if there’s any slowdown in ad spending on the back of the macro backdrop, margins could take a big hit.

Additionally, there’s growing competition from OpenAI and incumbents, limited or virtually zero buybacks in Q1, and legal overhang from the youth-safety regulatory scandal, which is pressuring usage and monetization.

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