Meta's AI Bet Could Deliver Another Earnings Surprise, Analyst Says

Meta Platforms Inc. (NASDAQ:META) could deliver stronger-than-expected third-quarter revenue as artificial intelligence improves its advertising business, according to Bank of America. In a Friday note, Bank of America Securities analyst Justin Post reiterated a Buy rating on Meta with an unchanged $810 price forecast. The forecast implies approximately 10% upside from the stock’s reference price of $736.72. Strong Advertising Demand Could Drive Earnings Beat Post expects Meta to report third-quarter revenue of $63.8 billion, above Wall Street’s consensus estimate of $63.3 billion. The analyst projects advertising revenue of $62.2 billion, representing 24% year-over-year growth. Bank of America’s advertising checks suggest that AI-powered targeting and automation are helping advertisers generate stronger returns. These improvements could support continued revenue growth. However, the firm lowered its third-quarter earnings estimate from $7.08 to $3.79 per share, below Wall Street’s $6.08 consensus. The reduction reflects an expected one-time $10 billion legal accrual tied to Meta’s settlement with state attorneys general. Excluding the charge, Post expects underlying earnings to exceed consensus estimates. AI Investment Could Reach $205 Billion in 2027 Bank of America raised its 2027 capital expenditure forecast to $205 billion from $192 billion, exceeding Wall Street’s $195 billion estimate. The increase reflects growing infrastructure requirements for Meta’s Muse AI products and enterprise AI initiatives. For 2026, the analyst expects Meta to narrow its capital expenditure guidance to $135 billion-$145 billion. Meanwhile, Bank of America expects fourth-quarter revenue of $74.1 billion and earnings of $8.74 per share, both above consensus estimates. See More: Top Value Stocks Muse Adoption Offers Another Growth Catalyst Post identified Meta’s expanding AI ecosystem as a potential catalyst for the stock. According to Sensor Tower data cited in the report, Muse surpassed 8.9 million downloads and reached 2.23 million daily active users as of Oct. 12. The analyst believes stronger adoption, enterprise AI partnerships and improved infrastructure efficiency could support a higher valuation. However, rising AI costs and uncertainty around monetization could pressure earnings growth in 2027. Bank of America remains bullish, citing Meta’s advertising strength and improving AI capabilities. Investors will focus on the company’s third-quarter results on Oct. 21 for updates on AI adoption, spending and the outlook for profitability. Earnings and Analyst Outlook Wall Street expects Meta to report third-quarter earnings of $6.09 per share, down from $7.25 a year earlier. Revenue is projected to reach $63.31 billion, up from $51.24 billion in the year-ago period. Analysts maintain a consensus Buy rating, with an average price forecast of $797.92. Recent analyst actions include JPMorgan maintaining an Overweight rating with a $920 price forecast, Citigroup raising its forecast to $895 and Goldman Sachs maintaining a Buy rating with a $762 forecast. Stock Analysis Meta stock fell more than 2% on Friday as investors pulled back from major technology and growth stocks ahead of the company’s upcoming earnings report. The Nasdaq Composite dropped 1.35%, while the S&P 500 declined 0.38%. Meta also faces a key earnings test on Oct. 21, which could increase volatility as investors assess the company’s advertising growth and artificial intelligence spending. Meta remains in a longer-term uptrend despite Friday’s decline. The stock trades 9.9% above its 50-day simple moving average (SMA) and about 14% above its 200-day SMA and exponential moving average (EMA). An October golden cross, a bullish technical signal, also supports the longer-term trend. However, shares have slipped 2.1% below their 20-day SMA, signaling weaker short-term momentum. The Relative Strength Index (RSI) stands at 53.11, indicating neutral momentum. Key technical levels include resistance near $780, slightly above the stock’s 52-week high of $779.82, and support around $711.50. Meta Price Action META Stock Price Activity: Meta Platforms shares were down 2.17% at $720.71 at the time of publication on Friday, according to Benzinga Pro data. Image via Shutterstock Read Also: Google Undercuts Some AI Rivals on Price as Gemini 4 Argon Reaches Enterprises