Bank of America resets Meta stock price target after earnings | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Meta reported its Q4 earnings on January 28. The earnings release beat consensus estimates, and the stock is up about 9.8% at the time of writing, Thursday afternoon, Jan. 29, according to Yahoo Finance.

“We ended 2025 strong with more than 3.5 billion people now using at least one of our apps every day,” said Meta CEO Mark Zuckerberg during the earnings call. “That includes more than 2 billion daily actives each on Facebook and WhatsApp — and just shy of that on Instagram. Our business also performed very well thanks to record-breaking holiday demand and AI-driven performance gains.”

Here are the Meta earnings highlights:

Q4 revenue was $59.89 billion, an increase of 24% year over year.
Full-year 2025 revenue was $200.97 billion, an increase of 22% YoY.
Q4 capital expenditures, including principal payments on finance leases, were $22.14 billion.
Full-year 2025 capital expenditures, including principal payments on finance leases, were $72.22 billion.
Cash, cash equivalents, and marketable securities were $81.59 billion as of December 31, 2025.
Long-term debt was $58.74 billion as of December 31, 2025.

Meta provided an outlook

Q1 total revenue anticipated to be in the range of $53.5 billion to $56.5 billion.
Full-year 2026 total expenses expected to be in the range of $162 billion to $169 billion.
Full-year 2026 capital expenditures, including principal payments on financeleases, anticipated to be in the range of $115 billion to $135 billion.

The company’s guidance assumes foreign currency is an approximately 4% tailwind to year-over-year total revenue growth, based on current exchange rates.

Meta’s Q4 earnings are unsurprisingly much better than Q3. I covered Q3 in my article “Bank of America resets price target as Meta earnings send stock reeling.”

Meta’s smart glasses will get some competition from Google this year.

Photo by Bloomberg on Getty Images

Bank of America raises Meta stock price target

Following the release of the earnings, Bank of America analysts Justin Post and Nitin Bansal updated their opinions on Meta (META) stock.

Analysts said that with revenue and EPS at $59.9 billion and $8.88, respectively, Meta beat Wall Street estimates, which were at $58.3 billion and $8.20, respectively. They noted that excluding the impact of foreign exchange fluctuations, ad revenue grew 23%, well above the ad sector.

Post said that Meta’s Q1 revenue outlook in the range of $53.5 billion to $56.5 billion is well above Wall Street estimates at $51.2 billion and at the high end, and suggests a 7pt acceleration in growth, excluding the impact of foreign exchange fluctuations.

He noted that Meta’s guidance for fiscal year 2026 expenses in the range of $162 billion to $169 billion is higher than Wall Street estimates at $150 billion, and capital expenditures guidance in the range of $115 billion to $135 billion is also higher compared to Wall Street estimates of $110 billion.

Post said that although the expense guide was well above estimates, revenue upside will offset this, and Meta appears to be expanding its sector leadership and building bigger AI moats.

Analysts raised Meta’s revenue estimates for 2026 by 6% to $254 billion, its expense estimates by 4% to $163 billion, and its EPS estimates by 8% to $31.24. They also raised their estimates for EPS in 2027 by 12% to $33.65.

In a research note shared with me, Post reiterated a buy rating and raised the price target from $810 to $885 for Meta stock, based on 26 multiple of his estimate for GAAP EPS for 2027, plus net cash.

“On a total company basis, including Metaverse investments, our valuation is at a slight premium to S&P 500, given Meta’s higher growth rate and AI opportunity,” he said. “Historically, Meta has traded at an average premium of 3pts to S&P 500.”

Analysts noted downside risks for Meta:

Decline in user activity from competition
Privacy or data issues impactng revenue generation
Potential for Wall Street to assign a negative value to Metaverse (RealityLabs)
New regulations that impact monetization

A pivotal year for Meta

Meta’s Reality Labs division has incurred approximately $73 billion in losses since 2021, according to Seeking Alpha. Zuckerberg said during the earnings call that he expects the division’s losses will peak this year and be similar to last year’s. According to Meta’s Form 10-K, loss from operations for Reality Labs in 2025 reached $19.2 billion.

Meta has recently discontinued its Metaverse for work, Horizon Workrooms, as a standalone app. The company will also no longer sell its Meta Quest headsets and Meta Horizon software as a service for businesses. These moves are the closest Meta can come to admitting that Metaverse is dead, without saying it out loud.

Investors who are betting on Meta are betting that Zuckerberg is right this time, that AI is the most important thing, and that his Superintelligence Labs will deliver. The fact that he was wrong about the Metaverse and how much money was wasted on it is conveniently ignored.

Expectations from Meta’s Superintelligence Labs are high, as it needs to deliver competitive frontier models. However, the reality is that despite investing billions in AI, it may have been too late for Meta.

More AI Stocks:

At a press briefing at the World Economic Forum’s annual meeting in Davos, Meta CTO Andrew Bosworth said that the lab has delivered its high-profile AI models internally this month. “They’re basically six months into the work, not quite even,” reported Reuters.

ChatGPT maker OpenAI has been struggling to catch up with Google’s Gemini 3 model since it launched. I think the idea that Meta’s team can catch up, after basically starting from scratch, is extremely optimistic.

Google announced in December 2025 that it plans to launch its AI-powered glasses in 2026. This will put Google as a direct competitor to Meta in that product category, as reported by CNBC.

Meta is running out of time to launch a “killer” AI product, and if it doesn’t do so by the end of the year, it will have another Metaverse-level failure on its hands.

The author holds no position in META at the time of writing.