Meta's Strong Revenues May Offset Concerns Over Soaring AI Investments: Analyst

Meta Platforms (NASDAQ:META) is poised for a significant market focus on its expanding artificial intelligence initiatives, with increasing investments in AI talent and infrastructure signaling a strategic pivot.

The company’s aggressive push into advanced AI development is driving elevated revenue and earnings per share estimates for the upcoming quarters, despite the potential for rising operating expenses.

Bank of America Securities analyst Justin Post, who reiterated a Buy rating on Meta Platforms on Friday with a price forecast of $775, anticipates the company’s second-quarter earnings call will prominently feature its expanding AI initiatives.

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Post highlighted key developments such as Meta’s $14 billion investment in Scale AI, recent reports of delays concerning the Llama 4 model, and the formation of Meta’s dedicated Super Intelligence team, all of which underscore a deepening commitment to advanced AI development.

Meta Platforms is anticipated to report strong second-quarter revenue, which Post believes could alleviate concerns regarding its significant AI spending.

He further noted Meta’s aggressive recruitment of top-tier AI professionals, offering competitive compensation packages that could contribute to an uptick in operating expenses.

Post raised its second-quarter estimates, projecting revenue and GAAP EPS of $45.4 billion and $6.12, respectively, above Street estimates of $44.6 billion and $5.84. The analyst expects 8% growth in ad revenue, with foreign exchange providing a positive tailwind. He noted buy-side expectations landing between $45.5 and $46 billion, above the high end of Meta’s $42.5 and $45.5 billion guidance.

For the third quarter, Post forecasted $46.9 billion in revenue and $6.20 in EPS, ahead of the Street’s $45.9 billion and $5.91. The analyst expects Meta to guide within a $44.5-$47.5 billion range and see ad revenue continuing to benefit from AI-driven improvements like automated campaigns, CRM integration, and rising monetization across Threads, WhatsApp, and messaging.

Post noted that despite the AI hiring ramp, Meta has room within its 2025 expense guide of $113-$118 billion. The analyst estimated $27.8 billion in second-quarter expenses, with higher capex potentially driven by data center expansion and AI infrastructure needs.

Post also expects Meta to benefit from new tax laws and R&D credits, possibly improving 2025 free cash flow by $4–5 billion.

The analyst noted Meta as one of the strongest long-term AI opportunities, with substantial revenue upside as AI tools integrate into the ad stack.

For full-year 2025, Post forecasted $190 billion in revenue and $26.83 in EPS (vs Street at $187 billion and $25.61). However, he cautioned that investor expectations are high heading into the print, especially with the stock up 22% year-to-date and trading at 24.5 times 2026 EPS.

Price Action: META stock is trading higher by 0.55% to $716.50 at last check Monday.

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