Morgan Stanley raises Meta Platforms stock price target to $850 on AI growth

Meta Platforms reported robust Q2 2025 earnings, significantly exceeding EPS and revenue forecasts, primarily driven by strong ad business performance and GPU-enabled algorithmic enhancements. This led multiple investment banks, including Morgan Stanley, BofA Securities, and DA Davidson, to raise their price targets, with Morgan Stanley increasing its target to $850 and its bull case to $1,100. Analysts highlighted Meta's capacity to fund increasing AI investments through its improving core business while simultaneously boosting profitability, underscoring strong investor confidence in its future outlook.

Analysis

Meta Platforms is demonstrating significant operational momentum, underscored by its second-quarter 2025 financial results which materially surpassed analyst expectations. The company reported earnings per share of $7.14, a 22.05% beat over the $5.85 forecast, on revenue of $47.5 billion, which was 6.26% above consensus. The primary driver for this outperformance is attributed to GPU-enabled algorithmic improvements enhancing user engagement and monetization within its core advertising business. This strong performance has triggered a wave of positive revisions from investment banks, with Morgan Stanley raising its price target to $850 and its bull case to $1,100, while BofA Securities and Citizens JMP both increased their targets to $900. The consensus view, reflected in upward revisions to 2025 and 2026 revenue and EPS estimates, is that Meta's robust core operations can sufficiently fund increased investments in AI and long-term projects while simultaneously accelerating profitability. This dynamic supports the narrative that Meta's strategic spending on AI is a key catalyst for future growth, a sentiment echoed by multiple analysts.

Key Decisions for Investors

• Given the strong earnings beat and unanimous price target increases from multiple investment banks, investors may view the fundamental strength as supportive for maintaining or increasing long positions.
• Investors should closely monitor the company's ability to sustain margin expansion, as the central bull thesis is that the core business can fund aggressive AI investment while still driving higher profitability.
• Evaluate the current P/E ratio of 26.4x against the backdrop of accelerated forward earnings, as analysts have raised 2026 EPS estimates by as much as 9%, suggesting the valuation could be justified by future growth.