Meta Gets A $1,000 Target From Wells Fargo — Says Enthusiasm Around Muse Product Cycle Is Warranted

Wells Fargo views 2027 as a trough earnings year in a new product cycle, with meaningful financial contributions from Meta’s Muse artificial intelligence agent expected further out.

• Wells Fargo maintained an ‘Overweight’ rating on Meta stock, according to TheFly.
• The firm sees Meta’s 2027 operating expenses reaching $210 billion to $215 billion, above the Street’s $202 billion estimate.
• Muse has surpassed 3 million weekly users who send at least one prompt, according to The Information.

Meta Platforms Inc. (META) drew a higher price target from Wells Fargo on Tuesday, with analyst Ken Gawrelski lifting his target to $1,000 from $796 while maintaining an ‘Overweight’ rating.

Gawrelski said investor enthusiasm around Meta’s Muse product cycle is warranted, according to TheFly. 

However, he expects the company’s third-quarter (Q3) earnings call to temper expectations for meaningful financial contributions from Muse in 2027.

Higher Spending Could Pressure 2027 Earnings

Wells Fargo said a 2027 operating-expense range of $210 billion to $215 billion would be reasonable, compared with the Street’s roughly $202 billion estimate, per TheFly. The firm sees earnings per share (EPS) of $31 to $32 as plausible, versus a consensus estimate of about $34.

That spending outlook follows an already sharp increase in Meta’s cost base. The company’s second-quarter revenue rose 28% year over year to $60.8 billion, while costs and expenses increased 55% to $42.03 billion.

Meta currently expects full-year 2026 expenses of $165 billion to $169 billion and capital expenditures of $130 billion to $145 billion.

Wells Fargo nonetheless views the spending cycle as supporting a potentially larger AI product opportunity, comparing the setup with the early investment phase for Reels.

Muse Adoption Builds, Ad Business Remains Strong

Muse has surpassed 3 million weekly users who send at least one prompt and more than 1 million daily users who do so, according to internal data reviewed by The Information. The product was launched in September as Meta’s consumer AI agent.

Meta’s core advertising business also remains supportive. Deutsche Bank said Monday that its latest channel checks were strongest for Meta and Alphabet, citing improved campaign performance, a more valuable Reels and Stories inventory mix and growing adoption of Meta’s AI advertising tools, per TheFly.

Investors will be watching Meta’s third-quarter (Q3) commentary for updated spending expectations and management’s timeline for turning Muse adoption into revenue, the two issues at the center of Wells Fargo’s more bullish long-term valuation and cautious 2027 earnings view.

What Retail Thinks About META Stock

On Stocktwits, retail investors’ sentiment around META stock dipped into ‘bearish’ territory from ‘neutral’ earlier.

So far this year, Meta Stock has rallied nearly 14%. In comparison, the Roundhill Magnificent Seven ETF (MAGS), which holds the stock, has risen around 13% over the same period.

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