New York, Jan 26, 2026, 20:45 (EST)
- Meta shares jumped following an upbeat analyst upgrade, just before the company’s quarterly earnings report.
- Bank of America maintained its buy rating and held firm on an $810 price target ahead of the release.
- Expect guidance on 2026 AI spending to drive near-term trading moves.
Meta Platforms shares jumped about 2% on Monday after Rothschild & Co Redburn upgraded the stock to “buy,” lifting its price target from $740 to $900 ahead of the quarterly report. That new target suggests roughly 37% upside from Monday’s close at $658.76. Analyst James Cordwell highlighted Meta’s AI-powered advertising “demand machine,” saying it can continue to grab share in non-search ads — those sold outside search engines — even as capital spending is expected to hit $117 billion by 2026. 1
Meta is set to release its fourth-quarter and full-year 2025 results after Wednesday’s close, followed by a conference call at 4:30 p.m. ET. The timing is key as investors look for updates on Meta’s spending plans and the returns it anticipates. 2
Wall Street views Meta stock as a barometer for digital advertising demand, since ads remain the main revenue source for Facebook and Instagram. This week’s earnings also put investor patience to the test over AI spending, with capital expenditures—money funneled into data centres, servers, and chips—taking center stage in the discussion.
Bank of America’s Justin Post and Nitin Bansal predict Meta will beat Wall Street expectations, projecting $59.2 billion in revenue and $8.27 in EPS for the fourth quarter. That edges past consensus estimates of $58.3 billion and $8.20. They maintained their buy rating and held the $810 price target. Post noted, “Our valuation is at a slight premium to the S&P 500, given Meta’s higher growth rate and AI opportunity.” 3
Investors are expected to pay less attention to the recently closed quarter and instead zero in on Meta’s guidance for 2026 expenses, headcount, and infrastructure costs. A rise in those areas could overshadow a strong advertising report, particularly if management remains unclear on the expected returns.
The Redburn upgrade rests on the belief that Meta’s automated ad systems continue to improve at targeting users and boosting conversions for marketers. In a crowded landscape where advertisers can rapidly reallocate budgets across platforms, that edge is crucial.
Meta goes head-to-head with Alphabet’s Google and Amazon.com for digital ad revenue, while battling TikTok and YouTube for user eyeballs. When engagement dips or ad loads approach a limit, it quickly becomes ammunition against boosting spending.
On Monday, a separate analysis on Seeking Alpha labeled Meta a “strong buy” ahead of the report, highlighting gross margins north of 82% and trailing twelve-month cash from operations exceeding $100 billion. The KM Capital note pointed out Meta’s forward price-to-earnings ratio sits around 23, with Wall Street’s consensus signaling about 26% upside. 4
The downside remains apparent. Should Meta announce another surge in AI spending without showing clear revenue gains, the stock could take a hit. Costs might climb further if regulators step up scrutiny of Meta’s apps. On Monday, the European Commission labeled WhatsApp’s “channels” feature as a “very large platform” under the EU’s Digital Services Act, imposing stricter rules to combat illegal and harmful content. 5
Right now, the market is betting that Meta’s ad engine will shoulder the spending burden. Wednesday’s report will reveal if that gamble pays off — or if stocks slide before bouncing back.
