While Meta Platforms’ artificial-intelligence spending plans have come under heavy scrutiny, one analyst is betting that they’ll pay off big time.
Meta’s stock price has taken a hit since CEO Mark Zuckerberg signaled more aggressive AI capital expenditures on the Oct. 29 earnings call, dropping 14% since the announcement. Capex could rise to over $100 billion by 2026, up significantly from less than $40 billion in 2024.
Investors are concerned that Meta is overspending on its AI ambitions and won’t be able to sufficiently monetize the technology — similar to how the company’s Metaverse spending failed to generate returns in 2021 and 2022. On the other hand, Alphabet has emerged as the AI favorite among the “Magnificent Seven” grouping of large technology companies.
Rosenblatt Securities analyst Barton Crockett said the spending fears are way overblown. In a Monday note, Crockett pushed back against the pessimism surrounding Meta, arguing that Meta’s return on AI investment is “unusually clear” through its robust advertising business. Crockett maintained a buy rating on the stock and issued a price target of $1,117 — representing over 70% upside from current levels.
AI has helped supercharge Meta’s core advertising business. Meta’s annualized revenue run rate for its AI advertising tools is more than $60 billion, according to the latest earnings call. “That means that Meta is already, via these AI tools, covering the incremental ~ $60B in capex for AI build out” between 2026 and 2024, Crockett pointed out.
While AI products such as chatbots aren’t yet highly monetized, Meta’s AI investments are optimizing its ad campaigns across its social-media platforms. As a result, Meta has been able to reaccelerate revenue growth to 20% — a sharp turnaround from the flat performance of 2022, Crockett wrote.
Meta’s AI-enhanced ad campaigns also helped the company win an antitrust case in November, providing further proof that AI has been a meaningful positive driver. The Federal Trade Commission had argued that Meta’s increased ad loads worsened its product. A judge ruled, however, that the quality of ads had improved, allowing higher ad loads without a meaningful decline in user engagement.
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The AI landscape has room for multiple leading companies, according to Crockett. “The stock market has sprinted to assuming Google, with the benchmark leading performance of Gemini 3.0, will be the winner. We, however, see multiple winners, and benchmark leadership moving back and forth, versus Google winning all the time,” Crockett wrote.
Citing a recent interview with OpenAI co-founder Ilya Sutskever, Crockett noted that there could be diminishing returns for large language models. Sutskever, who left OpenAI to co-found the AI startup Safe Superintelligence, shared with podcaster Dwarkesh Patel that more computational power and training data won’t be sufficient to power future breakthroughs in the technology, as existing models have already processed most of the existing high-quality text. With future gains coming from new training methods and algorithms, it makes sense for Meta to invest aggressively now.
In Crockett’s opinion, Meta’s successful ad business is already paying for itself. Zuckerberg’s ambitions to invest in AI capabilities beyond advertising provides investors with what Crockett sees as a “call option,” meaning there’s also room for massive upside with limited risk.
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