Meta Platforms (META) faces sharply higher artificial intelligence infrastructure spending and slowing advertising growth, Oppenheimer said in a report emailed Wednesday.
The company is scheduled to report its Q2 results on July 29.
The firm estimated Meta may need to spend at least $205 billion in 2027 to reach its reported 14-gigawatt data center capacity target, compared with Wall Street's estimate of about $159 billion. Rising memory and equipment costs could push the cost of one gigawatt of capacity to about $39 billion in 2026 and $44 billion in 2027, the report said.
Subletting excess computing capacity would be only about 4% incremental to consensus earnings and would not justify a higher valuation without long-term agreements, the report said, adding that advertising growth could also decelerate without incremental AI tailwinds.
The analyst cut 2026 and 2027 earnings estimates by 1% and 2%, respectively, and raised the 2027 capital spending forecast by 26% to $207 billion. For 2028, the analyst expects capital spending of $218 billion compared with Wall Street estimates of $150 billion, according to the report.
Oppenheimer maintained a perform rating on Meta Platforms.
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