Analysts Lower Meta Price Target to $720 Citing Rising AI and Cloud Costs

Several Wall Street analysts have trimmed Meta Platforms' price target to $720, pointing to mounting costs tied to artificial intelligence development and cloud infrastructure. While the company continues to generate robust ad revenue and maintain high user engagement across its platforms, analysts warn that investments in AI models, data center capacity and third-party cloud services are accelerating expense growth and could compress margins in the near term.

The revisions reflect a recalibration of profit assumptions rather than a change in the revenue trajectory: most analysts still expect top-line growth driven by advertising and monetization of new formats, but they are incorporating higher operating and capital expenditures into earnings models. Rising compute demands for training and deploying large AI models, plus expanded storage and networking requirements, are the main drivers cited for the increased cost base.

Investors are watching closely for management commentary on cost control, timing of AI-related returns, and how Meta plans to offset margin pressure. Analysts note that while heavier investment could deliver long-term competitive advantages, the short- to medium-term trade-off may be slower margin expansion. Expectations for capital spending and operating leverage have been adjusted to reflect a longer runway before AI initiatives contribute meaningfully to profitability.

Market reactions to the revised targets have varied, with some investors viewing the cuts as prudent recognition of near-term headwinds and others focusing on Meta’s sizable cash flows and proven ad business. Analysts emphasize that the firm’s scale and data assets give it an edge in AI, but they stress the importance of disciplined spending and clearer roadmaps for monetizing new AI-driven features.

Looking ahead, key indicators for analysts will include guidance on capital expenditure, metrics tied to AI product adoption, and any shifts in cloud vendor relationships or costs. For shareholders, the debate now centers on the balance between necessary investment to secure future growth and the immediate impact of higher AI and cloud costs on earnings and valuation.