Is Meta stock now too expensive?

Meta Platforms (Meta Stock Quote, Chart, News, Analysts, Financials NASDAQ:META) shares rose 12% in after-hours trading on July 29 after the company reported strong earnings and raised its outlook, prompting Roth Capital Markets to increase its 12-month price target to $835 from $740.

Kulkarni maintains his “Buy” rating.

“Meta’s still the AI winner, in our opinion,” analyst Rohit Kulkarni said in a July 30 report, noting the company’s increased capital and operating expenditure guidance for 2025 and its early forecast of more than $100-billion in CapEx and over $140-billion in OpEx for 2026. He also flagged the lack of detail on Meta’s estimated $15-billion investment in Scale AI, which contributed to a large cash outflow this quarter.

Meta shares climbed 12% in after-hours trading to around $775 as of 8 p.m. EDT on July 29 following strong quarterly results and raised guidance.

Kulkarni expects the stock to trade higher, citing momentum around Meta’s AI investments and revised forecasts that now include more than $100-billion in capital expenditures by 2026.

“At these levels, META shares are trading at ~27x ’25E EPS and ~56x FCF. META has demonstrated above-peer growth over the past nine quarters through superior improvements to recommendation engines and its ability to translate across surfaces,” he said. “We believe META’s push toward AGI/Super Intelligence over the next few years may deliver spillover that supersedes its historical rate of improvement; however, cost structure could weigh on the near-term debate.”

While the spotlight stayed on Meta’s AI strategy, management also struck a generally upbeat tone on the Q2 ad market, Roth’s Rohit Kulkarni noted. Ad revenue growth was led by Europe and other international regions, both up more than 20%, with North America and Asia-Pacific not far behind. at 18%.

“Although the macro clearly looks better than feared around de-minimis elimination, META’s engagement, ad impressions, ad load, and pricing growth flexibility contribute to a better-than-peer toolbox for accelerating ad spend and budget share,” he said.

Meta is putting over $15 billion toward building out its AI research team, pulling talent from OpenAI, Google, Apple, and others as it ramps up efforts in superintelligence.

The move signals just how seriously Meta is taking the AI race, especially at the frontier of advanced model development.

“(Zuckerberg) and his superintelligence team have built models that are capable of slight self-improvements, a major milestone and a primary contributing factor to the changed research strategy,” Kulkarni said. “Zuck expects model improvements to reshape all systems within a few years, for these models to be a mix of open and closed source (likely skewed to the latter), and to be hyper-personalized through the use of AR glasses.”

Kulkarni estimates Meta will generate $95.8-billion in Adjusted EBITDA on $187.9-billion in revenue in fiscal 2025, down from prior estimates of $100.3-billion and $196.6-billion, respectively.

He expects those figures to rise to $110.5-billion in EBITDA on $216.7-billion in revenue in fiscal 2026, though that’s also a revision lower from earlier projections of $117.9-billion and $231.1-billion.

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