Wall Street Sees 29% Upside for Meta While Retail Investors Turn Skeptical

Core Viewpoint - Wall Street analysts project a 29% upside for Meta Platforms (META) despite a shift in retail investor sentiment, which has turned skeptical regarding the company's aggressive capital expenditure plans for AI infrastructure [1]. Group 1: Financial Performance and Projections - Meta announced a capital expenditure (capex) plan of $115-135 billion for AI infrastructure by 2026, which is nearly double the previous year's spending [1]. - The company's operating margins have compressed to 41% from 48% due to a 40% increase in costs [1]. - Meta reported Q4 revenue of $59.89 billion and earnings per share (EPS) of $8.88, beating expectations [1]. Group 2: Retail Investor Sentiment - Retail investor sentiment on platforms like Reddit and X has cooled, with social sentiment dropping to 44.7 for the week ending February 12, down from 57.5 the previous month [1]. - Following the earnings announcement, retail traders expressed skepticism about the potential returns from Meta's aggressive AI spending [1]. - Concerns were raised regarding the execution of AI monetization and the ongoing losses from Reality Labs, which continues to lose billions despite significant investment [1]. Group 3: Analyst Ratings and Market Outlook - Despite retail skepticism, Wall Street remains bullish, with UBS raising its price target for Meta to $872 from $830, and Cantor Fitzgerald increasing its target to $860 [1]. - The consensus among 67 analysts includes 11 Strong Buy and 51 Buy ratings, with an average target of $859.85, indicating a potential upside of approximately 29% from current levels [1]. - Similar dynamics are observed for Alphabet (GOOGL), which has a capex plan of $175-185 billion for AI infrastructure by 2026 [1].