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Meta Likely to Beat Second-Quarter Expectations on Strong Ad Growth, BofA Says

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Meta Likely to Beat Second-Quarter Expectations on Strong Ad Growth, BofA Says

Meta Platforms' (META) second-quarter results are expected to top Wall Street's views amid solid advertising trends, while higher memory costs could prompt the technology giant to increase its full-year capital expenditures outlook, BofA Securities said Monday.

The brokerage expects the Facebook and Instagram parent to post earnings of $7.50 a share on revenue of $60.63 billion for the June quarter, citing "stronger" ad trends, partially offset by recent depreciation of the US dollar. The Street is looking for $7.18 and $60.20 billion, respectively, BofA said in a note to clients.

"With 10% workforce reduction in May (and) job postings down 49% (quarter on quarter) in (the second quarter), we expect EPS upside," BofA analyst Justin Post wrote. "We think content retrieval (and) ad revenue benefits from (artificial intelligence) model integration, usage and opportunities for Muse Spark, and potential for external compute sales would be focus areas for (the second-quarter) call."

Meta could lift its 2026 capex outlook to between $135 billion and $150 billion from its current range of $125 billion to $145 billion amid higher memory costs, according to the note. "We do not expect AI infrastructure investment to slow near term given industry-wide compute capacity constraints," Post said.

For the ongoing quarter, the brokerage expects Meta to project revenue between $60.5 billion and $63.5 billion.

"Risks include tougher comps that could decelerate ad growth below expectations, and further escalation (or prolonged) conflict in the Middle East that could impact ad spend and Meta's (third-quarter) growth outlook," Post wrote.

BofA reiterated its buy rating on the Meta stock while keeping its price objective at $835.

The company's current valuation "underappreciates AI capacity benefits," with future stock performance likely seen driven by new revenue streams, advertising upside from large language model integration, and proprietary chip progress, according to the brokerage.

"Biggest risks are commentary suggesting another step up in 2027 capex, capital raises, and social media addition trial expected to start in August," Post said.

Meta is scheduled to report second-quarter results July 29.

Price: $648.20, Change: $+2.19, Percent Change: +0.34%

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