JPMorgan upgraded Meta Platforms from Neutral to Overweight and raised its price target to $820 from $640, citing progress on frontier AI models and new products beyond advertising. The bank also projects higher capital spending through 2028, which it expects to pressure free cash flow even as Meta's core business keeps generating strong cash.
JPMorgan upgraded Meta Platforms (NASDAQ:META) from Neutral to Overweight on Thursday and raised its price target to $820 from $640. The firm said Meta shares are up 20% from recent lows but still down 1% year-to-date, versus the S&P 500's 12% gain.
Frontier models and new AI products
JPMorgan said Meta is in the early stages of releasing frontier models and AI-driven products beyond advertising, including the Muse AI agent and Meta Model API access. The Muse AI agent reached as high as number three in the U.S. app store on its second day, with early usage running at 10 times that of training cohorts.
JPMorgan said monetization is not the near-term priority for Muse, but the firm noted opportunities across a take-rate model and subscriptions. The bank added that Meta's goal in summer 2025 was to deliver models at the frontier within a year, which JPMorgan believes the company has essentially achieved.
Capex set to climb, pressuring free cash flow
JPMorgan projects 2027 capital expenditures of $243 billion, up 70%, and 2028 capex of $284 billion, up 17%, both well above consensus. The firm anticipates free cash flow pressure in the range of negative $65 billion to $70 billion in each of those years.
That projection contrasts with Meta's current cash generation, which produced $41 billion in levered free cash flow over the last twelve months. Meta has indicated it will maximize compute capacity in 2026 and 2027, with more flexibility in 2028 and beyond.
Source: Investing.com
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