Meta AI spend puts monetization gap in focus: Wedbush
Wedbush Securities maintained a Neutral rating and $671 price target on Meta Platforms as the company approaches its second-quarter earnings. Analysts project 2026 capital expenditure at $138 billion, noting a significant gap between AI investment levels and diversified monetization streams. While the core advertising business is expected to show strength with 26% revenue growth, concerns over high spending keep Wedbush on the sidelines.
*this image is generated using AI for illustrative purposes only.
Meta Platforms Inc. heads into its second-quarter earnings report under pressure, with shares slipping as investors weighed concerns over heavy artificial intelligence spending against expectations for strong growth. Wedbush Securities analysts Ygal Arounian and Chase Tohanczyn maintained a Neutral rating and a 12-month price forecast of $671 on the stock, citing a gap between capital expenditure intensity and diversified monetization as the central debate for the shares.
Analyst Consensus and Estimates
Wall Street expects the company to report quarterly earnings of $7.18 per share on revenue of $60.22 billion. Meta has a consensus price forecast of $825.49 among 38 analysts. Wedbush's Neutral rating suggests the firm expects the stock to perform in line with the broader market or sector peers.
Capex Guidance and Projections
Capital expenditure remains a key focus for investors. Wedbush estimates Meta’s 2026 capex at $138 billion, up 98% year over year, broadly in line with the consensus estimate of $139 billion, up 100%. Both estimates fall within management’s current guidance range of $125 billion to $145 billion.
| Period | Wedbush Estimate | Consensus Estimate | Growth |
|---|---|---|---|
| 2026 Capex | $138 billion | $139 billion | 98% - 100% |
| 2027 Capex | $173 billion | $175 billion | - |
Wedbush noted that buy-side expectations are already above $200 billion for 2027.
Advertising Business Health
Wedbush expects continued strength in Meta’s core advertising business, supported by product improvements and a solid macro environment. Second-quarter guidance called for 26% year-over-year revenue growth, down from 33% growth in the first quarter of 2026 due to 600 basis points tougher comparisons. AI-driven ad improvements continue to yield benefits through compute efficiency improvements in Andromeda, enhancements to Lattice modeling, and the GEM model architecture.
AI Monetization Strategy
Outside of the core advertising stack, initiatives such as Meta AI/Muse Spark, Business AI, subscription tiers, a potential cloud offering and custom silicon remain early-stage. The analysts stated that the disparity between capex intensity and diversified monetization is the reason they remain on the sidelines despite Meta’s valuation discount to peers.
Business AI Developments
In June at Conversations 2026, Meta debuted the Meta Business Agent and Meta Business Agent Platform across WhatsApp, Messenger and Instagram. Wedbush reported that weekly conversations in early versions of Business AI expanded 10-fold from 1 million to 10 million since the beginning of the year, though direct monetization has not yet begun.
What specific milestones or revenue targets need to be met for Meta's early-stage AI initiatives to justify the projected 2027 capex of over $175 billion?
How might the disparity between Wedbush's $671 price target and the $825.49 consensus resolve if buy-side capex expectations for 2027 exceed $200 billion?
What impact will the introduction of the Meta Business Agent Platform have on the company's ability to monetize WhatsApp and Instagram beyond traditional advertising?
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