Morgan Stanley Sees $775 Target, Four AI Products Adding $1–3 EPS
META•Morgan Stanley retains Meta as a top pick with a $775 price target, implying 30% upside despite a $380 billion capex plan for 2027–28. Four AI-driven initiatives—from a $10 billion search tool to compute leasing—could each add $1–3 to 2028 EPS and drive multiple expansion.
1. Research Note and Upside Forecast
Morgan Stanley analyst Brian Nowak maintains Meta as a top pick with a $775 price target, signaling roughly 30% upside. Investor concerns over a projected $380 billion capital expenditure plan for 2027–28 have weighed on the stock, which is down 15% over the past year compared with a 23% S&P 500 gain.
2. Four AI-Driven Catalysts
Nowak highlights four emerging offerings that could each contribute $1–3 to 2028 earnings per share: a Meta AI search tool with potential for $10 billion in annual revenue; tiered subscriptions for 3.5 billion users adding $7 billion in revenue; a GPU-powered ad engine where 1% ad‐revenue upside equals $3.5 billion and 2.5% EPS lift; and a Neocloud leasing option that leasing just one gigawatt could deliver an 8% EPS boost.
3. Stock Performance and Equity Raise Rumor
Meta’s stock slid 5.5% in a single session following reports of a planned equity raise to fund its AI infrastructure buildout. The selloff underscores near-term funding anxieties despite the long‐term upside projected by the four product catalysts.
