Wall Street analyst issues warning for Meta stock, cuts price target

Core Viewpoint - Meta Platforms is experiencing increased caution from Wall Street as MoffettNathanson lowers its price target to $750 due to concerns over margin deterioration linked to rising AI infrastructure spending, although this target still suggests a 25% increase from the last closing value of $597 [1][3]. Group 1: Financial Outlook - The firm anticipates margin compression in Q4 and through 2026, driven by rising costs in Reality Labs and significant investments in AI infrastructure [5]. - Analysts project an average 12-month price target of $846.48, indicating a potential upside of 41.63% from the current price, with estimates ranging from a high of $1,117.00 to a low of $655.15 [7]. Group 2: Cost Management and Risks - Meta is entering a unique cost cycle, with increasing difficulty in forecasting future costs as capital expenditures grow and the operating structure adapts to long-term AI investments [3][4]. - The absence of a mature enterprise or cloud business to balance these expenses raises the risk profile, leading to doubts about maintaining earlier efficiency gains [4]. Group 3: Market Sentiment - Despite the caution from MoffettNathanson, the broader Wall Street community remains optimistic, with 42 analysts maintaining a consensus 'Strong Buy' rating, including 34 'Buy' recommendations, seven 'Hold', and one 'Sell' [6].