By Martin Baccardax

Meta Platforms, the social media home of Facebook and the brainchild of billionaire CEO Mark Zuckerberg, has been busy of late.

The group unveiled a massive round of layoffs last month, aimed at making the group leaner and more focused on its artificial intelligence remit, and followed up less than a week later with plans to sell consumer subscriptions to its Meta AI chatbot in order to offset the billions it is spending on the new technology.

Earlier Wednesday, it launched an AI agent focused on businesses, tied to its family of apps, with paid options in both tokens and subscriptions expected over the coming months.

Zuckerberg told an event in London that the new agent will "take on more and eventually help you run your whole business," in what amounts to one of the biggest changes in corporate focus since the group was formed more than two decades ago.

All these moves, however, sit next to plans that involve a staggering $600 billion in capital spending, including some $350 billion over the coming two years, as it seeks to regain its lost momentum in the broader AI landscape.

Oddly, though, it's those very spending plans that have caused the biggest investor concerns. The stock is down nearly 10% this year, making it the weakest of all its Magnificent Seven cohorts, and remains nearly 20% south of the high it reached in early January.

Going back further only darkens the mood.

Meta shares have fallen some 25%, shredding around $500 billion in market value, since their heady apex of nearly $800 a share in August of last year.

The stock is also just hanging on to its position in the top ten of the S&P 500, with Micron Technology and Berkshire Hathaway nipping at its heels.

"Sentiment has troughed," said Morgan Stanley equity analyst Brian Nowak, citing lower visibility and confidence in its ability to turn AI investments into shareholder returns and its staggering rate of capital spending.

But that might just mark the time to buy.

Meta is a 'top pick' in Morgan Stanley's tech stable, and Nowak carries a $775 price target on the stock, suggesting gains of around 30% from current levels.

"We believe [AI investment and investor confidence] concerns, reflected in Meta's valuation gap to its megacap peers, arguably misses the company's improving moats," he said in a note published Wednesday. "Meta still has 3.5 billion daily active users spending hours per day (and growing) on the platform, along with a litany of GPU enabled improvements in the pipeline to drive further engagement and monetization growth."

Nowak sees four developing products and catalysts that could drive the stock higher, creating an "AI winner" that generates billions in new revenue and powers 2028 earnings upside of between $1 and $3 a share.

Chief among those is Meta AI, its chatbot which is now attempting to monetize a portion of the 3.5 billion daily users across the whole of Meta's platform base.

Nowak suggests that less than a third of those users, generating a single query per day, could drive $10 billion in annual revenue growth and 8% upside to his 2028 earnings outlook of $35.79 a share. Deeper usage could take that figure to 20%.

"Creating and scaling a differentiated top of funnel search agent won't be easy across billions of users (given entrenched behavior around Google and other emerging chatbots)," Nowak said. " "But Meta's leading personalized data and distribution and ability to create new use cases and sources of consumer utility make this agentic call option possible."

Subscriptions could drive another $7 billion in revenue, Nowak said, and $2 of earnings growth, as the group begins "turning emerging monetization dials and creating new costs to compete for audiences and wallet share."

Beyond Meta's capital spending plans, however, its ability to make money remains solid.

The group generated $56.3 billion in first-quarter revenue, topping Wall Street forecasts, and guided to a range of between $58 billion and $61 billion over the three months ending in June.

Muse Spark, Meta's in-house reasoning tool, helped drive a 10% boost to time spent on Instagram Reels and an 8% lift for Facebook video, both of which were the best engagement figures in four years. Ad impressions and prices were higher on the year, as well.

Reality Labs, however, continues to bleed cash and its Quest headsets, and AI glasses, aren't really turning heads when it comes to the group's bottom line.

Nowak, however, thinks the tide is ready to turn.

"Contrary to the share price, we think Meta's engagement and monetization moats are deeper than ever and don't see that changing," he said. "And agentic may even make their platform stronger."

Write to Martin Baccardax at martin.baccardax@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 03, 2026 12:55 ET (16:55 GMT)

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