Meta’s $145B Bet on AI: What the Market Is Getting Wrong About This Earnings Call

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(SeaPRwire) –  

Meta is about to tell Wall Street it can spend $145 billion on infrastructure and still grow revenue 24 percent. That is either extraordinary confidence or extraordinary overreach. Investors are bracing for Wednesday’s report, and the stock has only gained 9 percent this year despite the hype. The gap between what Wall Street expects and what actually gets delivered is where the real story lives.

Morgan Stanley just raised its price target to $820 from $775 and kept a Buy rating. Analyst Brian Nowak pushed up his 2027 and 2028 EPS estimates by 1 percent and 3 percent, citing stronger core advertising and AI subscription products. He also lifted revenue forecasts by 1 percent and 2 percent for those same years. Deutsche Bank’s Benjamin Black agreed with an $820 target, saying channel checks show core advertising is solid. The Street consensus sits at $832.58. TipRanks shows 39 Buys and six Holds.

Nowak tied those higher payments and other revenue forecasts to high-margin Muse and Business AI subscriptions. His forecast for payments revenue rose by $1 billion in 2027 and $2 billion in 2028. Total expenses still climb 1 percent both years because of Enterprise Platform sales efforts. Morningstar rates the stock three stars with a fair value of $850, arguing Muse adoption details matter more than any analyst target. They want usage trends, monetization plans, and proof it scales.

Meta guided full-year capex at $130 billion to $145 billion. That translates to $40 billion to $47 billion per quarter in the second half. Free cash flow will probably go negative. Morningstar flagged the CFO’s word about “flexibility” on 2027 spending and read it as a dodge. They are also waiting for a signed deal to sell compute to an outside customer, something that never materialized after last quarter. On top of the $2.4 billion in legal charges booked in Q2, new ones could surface.

I met a portfolio manager last month who runs a mid-cap tech fund. He told me he is not selling Meta but reduced his position by a quarter. His reason was not the ad business. It was the capex trajectory. He said spending $145 billion to chase AI infrastructure returns feels like betting the farm on a slot machine you have not even tested yet. “I want to see Muse generate real revenue before I buy more,” he told me.

Wall Street expects Q3 EPS of $6.66 and revenue of $63.34 billion. Last year’s adjusted EPS was $7.25 excluding a one-time tax charge. GAAP EPS came in at $1.05 a year ago. Meta has landed near the top of its guided range in the last two quarters, which would put this quarter’s revenue near $63.8 billion if the pattern holds. The question is whether negative free cash flow and uncertain Muse monetization will force a downgrade when the report comes out Wednesday after the close.