BofA Reiterates Buy on META as AI Spending Fears Ease

Core Viewpoint - Meta Platforms, Inc. is currently viewed as a promising investment opportunity in the AI sector, with BofA Securities maintaining a "Buy" rating and a price target of $810.00, driven by key near-term catalysts despite recent market challenges [1]. Group 1: Market Performance - Meta has underperformed compared to the broader market and major peers, with a year-to-date increase of 11% in 2025, while the NASDAQ rose by 18% and Alphabet surged by 56% [3]. - Analysts have raised Meta's 2026 earnings estimates by 16% since the beginning of 2025, but the P/E multiple contracted in the second half of 2025 due to deteriorating AI sentiment and rising operating expenses [3][2]. Group 2: Investment Sentiment and Catalysts - Concerns regarding AI spending and increasing operating costs have made investors cautious about Meta's stock [2]. - The company's guidance on 2026 expenses and the anticipated launch of large language models (LLMs) in the first half of 2026 are seen as potential catalysts for positive market sentiment [3][4]. - Management's commentary on the costs associated with building LLMs versus licensing could improve investor sentiment, highlighting the long-term benefits of in-house LLM development [4]. Group 3: Strategic Focus - Meta is actively expanding its advertising capabilities and making significant investments in artificial intelligence and the metaverse, positioning itself for future growth [4].