Meta Stock Dips Pre-Market After Wall Street Turns Cautious On Tech Giant’s Soaring AI Spending

• Benchmark’s rating cut underscored growing uncertainty around Meta’s aggressive spending on artificial intelligence projects.
• Bernstein analyst Mark Shmulik trimmed his price target to $870 from $900.
• Barclays said Meta’s strong third-quarter performance was largely overshadowed by its ballooning AI investment plans.

Meta Platforms Inc. (META) saw a slew of price target and rating cuts after the tech giant forecast significant expense growth in 2026. 

Benchmark has shifted its stance on Meta, lowering its rating to “Hold” from “Buy” and removing its previous price target, according to TheFly. The firm’s move underscores growing uncertainty around Meta’s aggressive spending on artificial intelligence projects that extend beyond its core advertising business.

Meta Platforms’ stock traded over 8% lower in Thursday’s premarket and was the top trending equity ticker on Stocktwits. However, retail sentiment around the stock jumped to ‘extremely bullish’ from ‘bearish’ the previous day. Message volume improved to ‘extremely high’ from ‘normal’ levels over a 24-hour period. 

Caution On Return On Investments

Benchmark also warned that Meta’s AI initiatives may not deliver strong near-term returns, particularly as the company faces rising competition from well-capitalized players such as OpenAI, Alphabet Inc.(GOOGL), and Tesla Inc. (TSLA). 

The firm noted that while Meta continues to command a leading position in digital advertising, its swelling operating and capital expenditures could compress returns on invested capital through at least 2027. 

Benchmark suggested that the company’s spending trajectory has outpaced the establishment of a clear return framework. 

Bernstein, Barclays Cut Price Targets 

Bernstein analyst Mark Shmulik trimmed his price target to $870 from $900 but maintained an “Outperform” rating. He cautioned, however, that the company’s expanding investment to create what it calls a “leading frontier AI lab” has revived investor memories of its costly Metaverse ambitions.

Barclays also lowered its price target on Meta, cutting it to $770 from $810 while retaining an “Overweight” rating. The firm said Meta’s strong third-quarter (Q3) performance was largely overshadowed by its ballooning AI investment plans. 

While Barclays expects the investments to yield returns over time, the firm warned that near-term profitability could take a hit, with most of the projected 2026 operating income growth and free cash flow now likely to be eroded.

Meta Platforms’ stock has gained 27% in the last 12 months. 

Also See: Trump Leaves ‘Super-Duper’ Nvidia Blackwell Chip Out Of Talks In Xi Meeting: Report

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