Meta's Q2 Results Turn Skeptics Into Believers As Capex Narrative Shifts
The social media behemoth's robust financial performance, particularly its resurgent advertising growth and bold commitment to artificial intelligence (AI) investments, has largely assuaged prior investor concerns about escalating capital expenditures.
Meta's stock surged more than 11% on Thursday, a day after the company reported quarterly results, reflecting renewed confidence in its strategic direction.Analyst sentiment turned markedly positive following the earnings release, with firms including Rosenblatt, Bank of America, Morgan Stanley, Cantor Fitzgerald, Wedbush, and KeyBanc all reaffirming bullish stances on the stock while raising their respective price forecasts.
Rosenblatt: A Turning Point
Rosenblatt analyst Barton Crockett maintained Meta Platforms with a Buy and raised the price forecast from $918 to $1086. Barton Crockett views Meta's second-quarter 2025 as a pivotal inflection point, marked by a strong rebound in ad growth and a bold expansion in capital investment.
He highlights the return to 20%+ ad growth on a $160 billion base as a key driver supporting capital expenditures trending toward $100 billion.
Crockett sees Meta's AI investments as key growth accelerators, driving more ad conversions, deeper engagement on Facebook and Instagram, and adoption of video generation tools by nearly 2 million advertisers. Even hardware efforts like the Ray-Ban smart glasses are gaining traction, with sales up 200% in the first half of 2025.
Looking forward, he models $68 billion in capex for 2025 and $97 billion for 2026, with expenses climbing 21% and 28% respectively. However, he argues that this investment cycle is generating meaningful returns.
He also points to Meta's AI vision, centered on 'Personal Superintelligence', as a strategic long-term opportunity that could further boost investor sentiment.
Bank of America: AI Strategy Is Paying Off
Bank of America Securities analyst Justin Post maintained Meta Platforms with a Buy and raised the price forecast from $775 to $900. Justin Post views Meta's second-quarter 2025 as a clear validation of its AI strategy, with revenue and EPS significantly beating expectations.
Post expects Meta to increase capex by $30 billion in 2026 and grow expenses by over 25% to support its push toward superintelligent AI.
While margins may tighten in 2026 if revenue growth slows, he believes AI investments are already generating meaningful returns and opening new monetization paths such as content creation tools, AI assistants, and devices.
He raised his 2025 revenue and EPS estimates by 5% and 11%, respectively, and his 2026 projections by 9% and 12%. His new price objective reflects increased confidence in Meta's growth and leadership in AI.
He noted Meta as one of the best-positioned companies to capitalize on the rise of agentic AI platforms, with upcoming catalysts like the Connect conference potentially adding further upside.
Morgan Stanley: GenAI Is Accelerating Monetization
Morgan Stanley analyst Brian Nowak maintained Meta Platforms with an Overweight rating and raised the price forecast from $750 to $850.
Brian Nowak sees Meta's second-quarter 2025 results and third-quarter guidance as evidence that the company's GenAI- and GPU-driven improvements are accelerating both engagement and monetization faster than expected.
He raised Meta's 2026 EPS forecast by ~9%. He lifted his price forecast, citing stronger ad revenue growth, expanding AI capabilities, and long-term upside potential in areas like superintelligence and core platform enhancements.
Nowak highlighted that improved recommendation systems have driven steady, compounding increases in time spent on Facebook and Instagram, with Instagram video engagement growing over 20% year-over-year globally. These engagement gains are fueling impression growth and unlocking deeper monetization opportunities.
On the ad side, he noted meaningful conversion lifts from Meta's AI-powered systems: GEM, Andromeda, and Lattice contributed to 3–5% increases in ad conversions across platforms. These improvements, which are compounding over time, underscore Meta's growing efficiency in monetization.
While Meta's 2026 capex projection rises by 17% (to $105 billion), resulting in an 18% decline in projected free cash flow per share, Nowak believes the optionality from OBBBA (On-Behalf-Of Business Buying Ads) could more than offset this decline—potentially adding $4 per share in FCF versus the ~$3 per share cut from higher spending. He argues the long-term monetization runway, reinforced by faster revenue and EPS growth, justifies a higher valuation multiple.
Cantor Fitzgerald: Core Strength Offsets Rising Spend
Cantor Fitzgerald analyst Deepak Mathivanan maintained Meta Platforms with an Overweight rating and raised the price forecast from $828 to $920.
Deepak Mathivanan sees Meta's second-quarter 2025 results as strong across the board, with revenue and EPS beating Street estimates by 6% and 21%, respectively.
He attributes the 22% year-over-year ad revenue growth (ex-FX) to improving advertiser demand and product enhancements. Meta guided third-quarter revenue growth of 16–23% (ex-FX), signaling further acceleration at the high end.
Despite raising its fiscal 2025 operating and capital expenditure guidance by $1 billion and $2 billion, and flagging another ~$30 billion increase in fiscal 2026 capex, Mathivanan remains optimistic.
He believes Meta's core business generates enough cash flow to support its aggressive AI investments, positioning the company firmly in the race toward superintelligence.
He raised his fiscal 2026 revenue and EPS estimates by 4% and increased his price forecast. He highlights key drivers: video engagement, ad revenue, WhatsApp, ad conversion rates, advertiser tools, and click-to-message ads.
Wedbush: Momentum Continues to Build
Wedbush analyst Scott Devitt maintained Meta Platforms with an Outperform and raised the price forecast from $750 to $920.
Scott Devitt viewed Meta's second-quarter 2025 results as significantly stronger than expected. He noted that although investor sentiment was already high, the results and better-than-expected third-quarter guidance, calling for up to 24.4% revenue growth, pushed Meta shares up over 10% after hours.
Devitt raised his 2025 revenue growth estimate to 18.9%, up from 13.5%, and expects more substantial operating income. He acknowledged Meta's growing expenses and capex, projecting $114 billion-$118 billion in 2025 expenses and ~$67B in capex, but believes the investment is justified by accelerating revenue growth and margin expansion.
He credited Meta's AI investments for driving improved ad targeting and engagement. AI-powered tools increased time spent on Facebook and Instagram by 5% and 6%, respectively, and boosted ad conversions by 3–5%. Video engagement remained strong, with Instagram and Facebook video time up 20% year-over-year. Meta AI surpassed 1 billion monthly active users in the quarter.
Devitt also highlighted strong regional ad revenue growth, 24% in Europe, 23% in Rest of World, 21% in North America, and 19% in APAC. Although Reality Labs posted a $4.5 billion loss, Meta's core business showed significant operating leverage. Devitt raised his third-quarter revenue forecast to $49.3 billion and expects 2025 operating income to rise 13%, with a projected margin of 41.5%.
KeyBanc: AI Payoff is Becoming Clearer
Keybanc analyst Justin Patterson maintained Meta Platforms with an Overweight rating and raised the price forecast from $800 to $905.
Justin Patterson believes Meta's second-quarter 2025 results confirm that AI is meaningfully boosting engagement and ad performance, enabling the company to ramp up its AI-related capital investments confidently.
Unlike in 2022, when concerns around overspending dominated, Patterson sees a more apparent connection between Meta's capex and AI strategy, backed by strong revenue growth and visible medium-term drivers like business messaging, Meta AI, and smart glasses.
Patterson raised his 2025–2027 revenue estimates by 4%–8% and EPS forecasts by up to 14%, citing a stable macro environment and gains from the AI product cycle.
He notes key AI wins: ad conversions improved by 5% on Instagram and 3% on Facebook, while time spent increased 6% and 5%, respectively. These gains also help justify elevated capex levels.
While he expects operating margins to compress in 2026 and 2027 due to higher spending, he believes investors are comfortable with this tradeoff as long as profits and EPS continue to rise and AI-related progress remains visible.
He also flagged Meta's new Superintelligence team as a long-term growth lever, though its impact will likely take more time to materialize.
Price Action: META stock is trading higher by 11.6% to $775.91 at last check on Thursday.
Image by Tada Images via Shutterstock
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