Meta needs 23% gain to hit $700 after Q1 earnings beat

Meta Platforms reported Q1 EPS of $10.44, beating the $6.66 consensus by 57%, as revenue rose 33% to $56.31 billion.

"We are on track to deliver personal superintelligence to billions of people," Chief Executive Officer Mark Zuckerberg said.

The earnings beat was overshadowed by a capex increase. Management raised full-year 2026 capital expenditures to a range of $125 billion to $145 billion, up from a prior $115 billion to $135 billion, citing higher memory pricing and additional data center costs. Reality Labs lost $4.03 billion in the quarter, extending a $19.2 billion loss in fiscal 2025. Operating cash flow climbed 34% year over year, though free cash flow growth has decelerated.

Shares trade at $568.43, down 14% year to date and 18% over the past 12 months. At 14 times forward earnings of $41.13, the stock would need to re-rate to 17 times to reach $700 — a 23% gain. The analyst consensus target of $828.80 implies 46% upside, with 89% of analysts rating the stock a buy.

The path to $700 depends on three conditions aligning. Second-quarter revenue must land at or above the $58 billion to $61 billion guidance range. Management must reassure investors on the next earnings call that 2027 capex will not balloon further. And Reality Labs losses need to keep narrowing.

The valuation case is straightforward. A 30%-plus net margin business at 14 times forward earnings does not need a miracle to support $700. The trailing P/E stands at 21 with a PEG ratio of 0.85. The 52-week range spans $520.26 to $794.38, meaning shares sit closer to the bottom than the top.

Wall Street remains overwhelmingly bullish. Of 64 analysts covering the stock, 57 rate it a buy or strong buy and seven rate it a hold. No analysts recommend selling. The internal model at 24/7 Wall St. is more measured, with a base case of $674.92, a bull case of $719.91 and a bear case of $628.80 at 90% confidence.

The guidance raise signals management expects AI-driven revenue to accelerate, but the market is demanding proof that capex will translate into earnings. Investors will watch the Q2 report for updated segment margins and any signal that the peak of the investment cycle is in sight.

This article is for informational purposes only and does not constitute investment advice.