Meta Platforms Inc. (META) received a higher price target from Wells Fargo on Tuesday, with analyst Ken Gawrelski raising his target to $1,000 from $796 while maintaining an Overweight rating.
Gawrelski said investor enthusiasm around Meta’s Muse product cycle was warranted, according to TheFly.
However, he expects the company’s third-quarter earnings call to temper expectations for meaningful financial contributions from Muse in 2027.
The comments come as investors assess the potential of Meta’s consumer AI agent while also watching the company’s rising spending and its impact on future earnings.
Meta stock was down 0.07% on Tuesday.
Higher spending could weigh on 2027 earnings
Wells Fargo said Meta’s 2027 operating expenses could reasonably reach $210 billion to $215 billion, above the Street’s estimate of roughly $202 billion, according to TheFly.
The firm sees Meta generating earnings per share of $31 to $32 in 2027, compared with a consensus estimate of about $34.
The spending outlook follows a significant increase in Meta’s cost base.
Second-quarter revenue rose 28% year over year to $60.8 billion, while costs and expenses increased 55% to $42.03 billion.
Meta currently expects full-year 2026 expenses of $165 billion to $169 billion and capital expenditures of $130 billion to $145 billion.
Despite the higher spending outlook, Wells Fargo views the investment cycle as supporting a potentially larger opportunity for Meta’s AI products.
The firm compared the setup with Meta’s early investment phase for Reels.
Investors are expected to focus on Meta’s third-quarter commentary for updated spending expectations and management’s timeline for converting Muse adoption into revenue.
Muse adoption gains momentum
Muse has attracted more than 3 million weekly users who send at least one prompt and over 1 million daily users who do so, according to internal data reviewed by The Information.
Meta launched Muse in September as its consumer AI agent.
Citigroup also sees significant potential for the product.
The brokerage estimates Muse could generate more than $27 billion in annual revenue by 2030 as user adoption and engagement increase.
Citi estimates the revenue could include around $23 billion from transaction-related revenue and roughly $4.5 billion from subscriptions.
The brokerage said Muse downloads have exceeded 6.6 million since launch, while daily active users have reached 1.8 million as Meta expands awareness and new use cases emerge.
Citi views Muse as potentially becoming a key entry point for users searching, comparing, and transacting online.
The brokerage also sees the product benefiting from a first-mover advantage as Meta expands its broader AI strategy.
Advertising business remains supportive
Meta’s core advertising business continues to provide support for the company.
Deutsche Bank said its latest channel checks were strongest for Meta and Alphabet, according to TheFly.
The bank cited improved campaign performance, a more valuable mix of Reels and Stories inventory, and growing adoption of Meta’s AI advertising tools.
Meta faces competition in the personal AI agent market from products including OpenAI’s ChatGPT Dots, Google’s Gemini and Anthropic’s Claude.
For investors, the company’s upcoming third-quarter results and commentary could provide more clarity on the balance between rising AI-related investment, Muse adoption, and its potential contribution to revenue.
Wells Fargo’s higher price target reflects its more bullish long-term view, while its 2027 earnings expectations point to potential pressure from higher operating expenses.
The post Why this analyst expects Meta stock to hit $1,000 appeared first on Invezz
