Meta Platforms' (META) upcoming results are likely to benefit from continued strength in its advertising business, while the technology giant could raise its full-year capital expenditures guidance as it pursues its artificial intelligence-related initiatives, Wedbush Securities said Wednesday.
The brokerage expects the Facebook and Instagram parent to post second-quarter earnings of $7.10 a share on revenue of $60.08 billion. The print is likely to highlight a strong core ad business that is benefiting from AI-driven product improvements and robust ad spending, according to Wedbush.
Wall Street is looking for EPS of $7.20 on sales of $60.22 billion, the brokerage said. Meta is scheduled to report results July 29.
"Management's engagement data points show real usage growth in Meta AI, and there are positive early indications on business AI as well," Wedbush analysts Ygal Arounian and Chase Tohanczyn said in a note to clients Wednesday. "However, outside of the ad stack, initiatives are still early: Meta AI/Muse Spark, business AI, subscription tiers, a potential Meta cloud offering, and custom silicon are all early-stage or potential initiatives."
The company's current 2026 capex outlook range is $125 billion to $145 billion.
"Meta has seen significant growth in capex investment, and we expect to see that continue as the company works towards its superintelligence ambitions and builds out its Muse Spark foundation models," Arounian and Tohanczyn said. "We don't expect to get specific guidance for 2027 capex, but we could see 2026 capex guidance raised again, and commentary directionally that 2027 spend should step up materially again."
The gap between Meta's capex intensity and diversified monetization opportunities remains the "central debate" surrounding the stock, Wedbush said.
The brokerage has a neutral rating on the tech giant's stock, with a price target of $671.
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