Meta Platforms (META, Financial) CEO Mark Zuckerberg announced plans to invest billions of dollars in constructing large data centers to support the company's artificial intelligence (AI) ambitions, aiming to achieve artificial general intelligence (AGI). The first data center, named Prometheus, is expected to be operational by 2026. This move signals Meta's confidence in its mid-term revenue growth and suggests that the AI capital expenditure cycle is far from over.
Bank of America analysts interpret this as a significant commitment to AI, reflecting an increase in Meta's revenue forecasts, though they have slightly lowered the 2026 earnings per share (EPS) prediction due to higher AI-related spending. The bank maintains a "buy" rating for Meta, raising the target price from $765 to $775.
The announcement also highlights Meta's recruitment drive for AI talent, positioning the company as a leader in AI innovation. Analysts expect AI investment to be a key focus in upcoming earnings calls, with Meta needing to demonstrate strong AI returns to justify valuation expansion.
Bank of America has raised Meta's revenue estimates for 2025 and 2026, but slightly reduced EPS forecasts to account for increased AI expenses. The bank notes an intensifying AI investment race among tech giants, with Google likely to see increased capital expenditure expectations in 2026.
