Baird Keeps Buy on Meta but Says 'Wounded Sentiment' Could Last Into 2026

Baird analysts reaffirmed a buy rating on Meta Platforms but trimmed the firm's price target, saying that investor sentiment around the social media giant remains bruised and could persist into 2026. According to Investor's Business Daily, the research team pointed to a mix of near-term headwinds — including a softer ad market, heightened regulatory scrutiny and intense competition for user attention — that are keeping upside expectations in check.

While Baird continues to view Meta as a long-term growth story, the firm signaled that optimism may take time to return. Management’s heavy investments in AI, content monetization initiatives such as short-form video, and cost-discipline measures are potential upside drivers, but they may not be sufficient to overcome near-term skepticism among investors. The trimmed price target reflects a more cautious view of how quickly market sentiment and revenue momentum will recover.

For shareholders, the message is nuanced: Meta’s fundamentals and product roadmap provide a constructive long-term case, yet the path to a sustained rebound may be bumpy. If ad demand stabilizes, or if new AI-driven ad products and improved monetization of Reels and other formats accelerate revenue growth, sentiment could improve faster than anticipated. Conversely, any further sign of ad weakness, regulatory setbacks, or slowing user engagement would likely prolong the correction in investor expectations.

Investors should weigh the buy rating against the likelihood of short-term volatility. Risk-tolerant investors who focus on multi-year outcomes might interpret the trimmed target as a buying opportunity, while those more sensitive to near-term shocks may prefer to wait for clearer signs of recovery in advertising trends and guidance from Meta’s management.

Bottom line: Baird’s stance underscores the dual nature of Meta’s outlook — solid long-term prospects tempered by wounded sentiment and macro or regulatory risks that could suppress the stock’s upside through 2026. Monitoring ad-market indicators, product monetization progress and regulatory developments will be key for investors evaluating timing and risk exposure.