11-07-2025
Piper highlights Meta as best large-cap pick, lifts forecasts on AI strength
-- Piper Sandler analysts reiterated Meta (NASDAQ:META) as their top large-cap internet pick, citing improving digital ad trends and rising investor sentiment heading into second-quarter results.
"We like META most in Large Caps given strong checks & AI investments," the analysts wrote, raising their estimates for the company.
Digital ad spend grew 6.6% year over year in the second quarter, a notable acceleration from the first quarter and 130 basis points above Piper's expectations.
'2Q results returned to a beat/raise cadence after 1Q25 was the worst our ad buyer has seen since 4Q22,' the firm noted in its note assessing the sector.
June was reportedly the strongest month, with performance advertisers capitalizing on brand and China reseller weakness.
Commentary from Cannes also boosted optimism. Piper highlighted Meta's new WhatsApp ad units, with one ad buyer describing them as 'effective & interest-based' despite initial skepticism.
Meta's resilience was said to have been evident throughout, the analysts said, helped by lower CPMs that 'brought in new advertisers that were priced out of the market.'
AI continues to underpin Piper's bullish stance. The analysts pointed to the company's Reels product, new verticals such as travel and CPG, and CEO Mark Zuckerberg's hiring strategy and AI roadmap as key positives.
'We're excited to hear CEO Zuckerberg talk about the new AI hires and strategy,' they wrote, adding that investors appear braced for higher capital expenditures.
Piper recently lifted Meta's out-year estimates, projecting that third-quarter revenue could hit $47 billion, or 16% year-over-year growth.
'Best execution in Internet, reiterate OW,' the analysts concluded.
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