Shares in Meta Platforms (META) are down 12% on Thursday, extending Wednesday’s post-market losses, after the social media and AI tech giant recorded a one-time charge of nearly $16B after implementing President Donald Trump’s OBBBA tax law, which impacted its bottom line in the third quarter.
For the remainder of 2025 and years to come, the company expects significantly lower taxes from Trump’s new tax law.
The company also warned that its expenses “will grow at a “significantly faster percentage rate,” in 2026 as it would “spend aggressively” to achieve its goals to have crucial AI technology and infrastructure at its disposal.
Word on the Street
Oppenheimer downgraded Meta’s investment rating to “perform” from “outperform” and removed its price target following Q3 results and said risk/reward is “properly reflected” after the stock’s plunge. The research firm said the company’s significant investment in its AI superintelligence unit, despite the unknown revenue opportunity, mirrors 2021/2022 Metaverse spending.
Bernstein praised Meta’s revenue growth driven by AI execution but said it was reminded of the “Metaverse days” after the company warned of climbing investment levels. Ad impressions were the primary revenue growth driver in Q3, though pricing growth was also strong; paid messaging revenue growth remains strong but small, the research firm said. The rating was maintained at “buy,” but the PT was cut by $30 to $870, a 15.7% upside.
Citigroup maintained its rating at “buy” but lowered its price target to $850 (13.1% upside), from $915. The research firm now expects lower profitability for 2026 due to the company’s aggressive spending and investments next year. They also acknowledged that the magnitude of investments is greater than what most expected.
Truist Securities said it remained constructive on Meta and believes the company continues to earn the right to invest as long as it delivers faster top-line growth and FCFs in the near term. They also noted that Q3 results reflected robust ad share gains fueled by AI improvements across ad recommendations, monetization, and user growth/engagement. The rating was unchanged at “buy,” but the PT was lowered by $15 to $875, a 16.4% upside.
Piper Sandler called the results “very impressive” and said the pressure on shares from the expense commentary for 2026 is a buying opportunity. The research firm projected flat operating income for next year and said FCF will likely be down. They remain bullish on ad model investments like GEM, Lattice, and Andromeda. The rating was maintained at “overweight,” but PT was cut by $40 to $840, an 11.8% upside.
Bank of America said they expect Meta’s stock to be controversial given a limited EPS growth outlook and y/y FCF pressure in 2026. However, they see the company in a position of strength with its massive user network and the opportunity to integrate compelling AI products, including content creation tools, over the next two years.
“We believe the bad news on expenses is now mostly in the stock, while product catalysts, including a new LLM and content creation tools, can drive upside engagement and revenue in 2026,” the research firm said. The rating was maintained at “buy,” but the PT was cut by $90 to $810, a 7.8% upside.
Seeking Alpha analyst Ahan Vashi upgraded Meta to “buy” and said the company’s Q3 revenue and core KPIs were strong, but a one-time ~$16B tax charge caused a sharp EPS drop and triggered a stock decline.
Despite rising expenses and CAPEX, META’s valuation is now attractive, with a 5-year CAGR return estimate of ~16%. Technical and fundamental analysis support a bullish outlook for META, with a target range of $850-1075 per share, Vashi said.
Seeking Alpha analyst Kenio Fontes also upgraded the company to a “buy” rating after the Q3 report and blamed the market overreaction for the stock price decline stemming from the non-recurring tax charge. Fontes noted that Meta’s core business remains strong, with 26% YoY revenue growth, robust ad impressions, and expanding AI and Reality Labs initiatives.
He also highlighted that the stock now trades at a 2026 P/E of 23x, making the company the cheapest among the “Magnificent Seven,” enhancing its margin of safety. While ad dependence remains a concern, META’s solid fundamentals and discounted valuation present a compelling medium- and long-term opportunity, Fontes said.