'Steadiest ship in a brewing macro storm': Why Wall Street is bullish on Meta ahead of first-quarter earnings
Meta Platforms is set to report its first-quarter earnings on Wednesday in a much-anticipated report for Wall Street.
The social media giant will explain how the macroeconomic uncertainty related to President Donald Trump's trade policy is affecting its business.
Meta will also likely face questioning from analysts related to ongoing litigation from the US government, which claims the company operates as an illegal monopoly.
Shares of Meta are down 26% from its record high reached in mid-February.
Here's what Wall Street expects when Meta reports earnings later this week.
Wells Fargo: 'Steadiest ship in a brewing macro storm'
Wells Fargo said it expects Meta to be the "steadiest ship in a brewing macro storm," arguing that its dominance relative to other advertising platforms should shield it from some of the macroeconomic pain.
"Checks indicate ad spend growth on Meta moderated throughout the qtr, but likely more resilient vs. other ad platforms against softer macro backdrop given minimal brand exposure," Wells Fargo said.
The bank said Meta's Reels platform, which directly competes against TikTok, should have benefited from the uncertainty surrounding a potential TikTok ban earlier this year.
"Checks suggest ad spend on TikTok shifted to Meta during the heightened uncertainty in Jan, with some budgets permanently moving to Reels," the bank said.
Wells Fargo rates Meta Platforms at "Overweight" with a $752 price target.
JPMorgan: 'Strong execution and growing AI monetization'
Despite macroeconomic concerns, JPMorgan said that Meta's strong execution and AI opportunities should help the company perform well when it reports results.
"We believe META remains well-owned driven by strong execution & growing AI monetization," JPMorgan said. "We're bullish on AI-driven Ad improvements, video unification, WhatsApp Ads, Llama, & Meta AI."
The bank said it believes investors expect Meta Platforms' revenue to grow by about 13% year over year. Meeting or beating those expectations would likely benefit the stock.
"Macro remains a concern though META's DR skew (~80% of ad revs) & base of tens of millions of advertisers should prove relative insulation," the bank said.
On the capex side, JPMorgan expects the company to maintain its aggressive investment philosophy to capture the AI opportunity.
"Our $108B 2025 GAAP expenses is below Meta's $114B-$119B guide as we expect META to rationalize expenses against lower growth," JPMorgan said.
JPMorgan rates Meta Platforms at "Overweight" with a $610 price target.
Bank of America: Expect a modest beat on revenue and profits
Bank of America is leaning bullish on Meta heading into its coming earnings release.
The bank said takeaways from Alphabet's comments on YouTube and its advertising checks should fuel a "modest beat" for Meta.
Meta's workforce reductions in February and recent layoff announcements related to its Reality Labs division suggest that management is laser-focused on controlling operating expenses.
"For expense guide, we would expect a trajectory toward the low end of the current $114-$119bn 2025 range," Bank of America said.
The bank is also bullish on Meta's growing AI capabilities and its potential to unlock more advertising spending.
"We think Meta's Al driven ad improvements still have several quarters to play out and for 2025 we see strong drivers of growth, including: 1) Expanding AI/ML ad capabilities, 2) Growing SFV usage aided by AI suggestions, 3) Growing messaging revenues, & 4) Monetization of untapped surfaces (Threads, Meta Al, Marketplace)," the bank said. SFV refers to "short form video."
Bank of America rates Meta Platforms at "Buy" with a $640 price target.
Goldman Sachs: Reels can drive more growth
Analysts at Goldman Sachs said Meta's Reels platform has the potential to drive significant growth for the company.
"We still see a sizable opportunity for Reels to remain a key revenue growth tailwind for META in the coming years as the CPM gap closes further and as Reels continues to increase as a % of total ad impressions," Goldman Sachs said.
On the spending front, the bank expects Meta to "somewhat pull back" on its planned investments due to macroeconomic headwinds.
Goldman expects 2025 total GAAP expenses of about $110.5 billion, slightly below the company's guidance range of $114 billion to $119 billion.
Meta Platform's capex guidance will be the key debate for investors as worries mount about an economic slowdown.
"For META, we see the key debates being how the company indicates a framework of balance between long-term investments and annualized operating costs if the macroeconomic environment impacts the business in the coming quarters," Goldman Sachs said.
Goldman Sachs rates Meta Platforms at "Buy" with a $685 price target.
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