Should you sell your META stock?

In a Jan. 26 earnings preview, Roth Capital Markets analyst Rohit Kulkarni reiterated a “Buy” rating on Meta Platforms (Meta Platforms Stock Quote, Chart, News, Analysts, Financials NASDAQ:META) and lowered his 12-month price target to US$800.00 from US$845.00, reflecting a more conservative near-term valuation framework despite a constructive operating outlook.

Kulkarni said Meta remains his No. 2 mega-cap pick for the first half of 2026. He raised his revenue assumptions, lowered EPS expectations, and introduced 2027 estimates, applying roughly 22x his 2027 EPS forecast to arrive at the revised target.

While Kulkarni said Meta’s revenue growth, scale advantages and engagement intensity justify a premium long-term valuation multiple above 25x earnings under normalized margins, he is applying a lower multiple in the near term due to the company’s heavy AI investment cycle…

Meta is scheduled to report fourth-quarter results on Jan. 28 after market close. Kulkarni said near-term catalysts include the rollout of frontier AI models from the newly formed TBD Labs, continued scaling of the Andromeda and Generative Ads Model platforms, and the expected launch of the Prometheus data centre in Ohio. He added that major global events in 2026, including the FIFA World Cup, Winter Olympics and U.S. midterm elections, should help offset tougher comparisons in the second half of the year.

While Kulkarni said Meta’s revenue growth, scale advantages and engagement intensity justify a premium long-term valuation multiple above 25x earnings under normalized margins, he is applying a lower multiple in the near term due to the company’s heavy AI investment cycle.

“These investments are structurally front-loaded, margin-dilutive in the near to medium term, and introduce greater uncertainty around the timing of earnings normalization,” he said, citing elevated spending on AI infrastructure, custom silicon, data centres, inference workloads and safety systems.

Ahead of the print, Kulkarni said a clean beat remains likely. He said fourth-quarter revenue above US$59-billion and first-quarter guidance with a midpoint above US$52.5-billion would likely be viewed positively. Advertising growth is another key swing factor, with Kulkarni noting that ad revenue growth above 23.5% in the fourth quarter would exceed buyside expectations.

Reality Labs losses are also in focus. Kulkarni said segment losses have remained in a US$4.0-billion to US$4.5-billion range over the past six quarters and could tick higher in the fourth quarter. Any indication that losses are stabilizing or narrowing would be a clear positive, in his view.

Looking further out, Kulkarni said investor debate continues to centre on the upper bounds of Meta’s spending cycle. He models operating expenses of about US$150-billion in 2026 and said guidance above US$160-billion could cap near-term upside. He also models capital expenditures of roughly US$110-billion next year, warning that guidance above US$120-billion could weigh on the shares.

Kulkarni said Meta should generate about US$102.0-billion in Adjusted EBITDA on revenue of approximately US$200.1-billion in fiscal 2025, improving to roughly US$121.2-billion in Adjusted EBITDA on revenue of about US$237.6-billion in fiscal 2026.

He added that while mega-cap stocks have lagged small caps since early November, Meta’s shares now trade in the lower-middle of their recent valuation range, at about 22x 2026 earnings, leaving room for re-rating once spending visibility improves.

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