META Is Our Excessive Mega-cap Stock Select, This Analyst Says

Roth Capital Markets analyst Rohit Kulkarni maintained a “Buy” rating and raised his 12-month aim to US$835.00 for Meta Platforms (Meta Stock Quote, Chart, Data, Analysts, Financials NASDAQ:META) in an Oct. 16 earnings preview, calling the stock his excessive mega-cap select heading into year-end, adopted by Amazon and Alphabet.

Kulkarni well-known Meta will report third-quarter outcomes on Oct. 29 after market shut and that he expects upside to Street estimates, with fourth-quarter steering doubtlessly “bracketing 20% year-over-year improvement on the extreme end.” He argued that the present underperformance versus AI leaders, pushed by OpenAI’s bulletins and investor points about Meta’s 2026 AI spending ramp, represents a looking for different.

“We’d be incremental patrons of META shares amidst ongoing underperformance versus totally different AI winners,” he acknowledged. “At current ranges, the prospect/reward stays participating given continued earnings acceleration from new advert fashions and the company’s unmatched compute scale.”

He cited Andromeda and GEM, Meta’s new AI-driven ad-optimization strategies, as key catalysts for near-term effectivity.

“Andromeda (commercials retrieval) and GEM (commercials ranking) must be completely deployed all through Fb and Instagram by the second half of 2025,” he acknowledged. “Andromeda’s rollout has already lifted conversions by 4% on Fb Mobile Feed and Reels, whereas GEM has pushed a 5% improve on Instagram and three% on Fb Feed.”

The combo, he acknowledged, must translate to improved advert placement and higher CPMs, boosting advert pockets share by way of 2025.

Whereas acknowledging a lacklustre displaying at Meta Be a part of, the place new AR glasses, neural band, and VR headset demos encountered technical factors, Kulkarni acknowledged the event reaffirmed the company’s long-term give consideration to new interaction platforms for digital media.

“The hardware-software stack isn’t close to mass adoption however,” he acknowledged, “nonetheless Meta’s persistence in rising new kind elements stays a strategic profit.”

He moreover well-known investor concern spherical rising capital expenditures, notably tied to the Prometheus AI cluster beneath constructing in Ohio and the deliberate 5-GW Hyperion progress.

“Compute demand continues to exceed present in every Meta’s core workloads and AI labs,” he acknowledged. “Even with present multiyear cloud agreements, over US$10-billion with Google and US$14.2-billion with CoreWeave, we anticipate 2025E and 2026E CapEx could rise extra.”

Kulkarni added that Meta’s “AI Avengers” initiative, combining its TBD Lab, FAIR, Product & Utilized Evaluation, and MSL Infra teams, underscores its ambitions to regain administration in foundational AI fashions.

“We nonetheless view Meta as an AI winner,” he acknowledged. “Rejoining the frontier-model race usually is essentially the most direct path to controlling its long-term future.”

Kulkarni acknowledged that Meta must submit US$100.3-billion in Adjusted EBITDA on earnings of US$196.6-billion in fiscal 2025, enhancing to US$117.9-billion on earnings of US$231.2-billion in fiscal 2026.

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