Key Takeaways
- Meta jumped 5% today after JPMorgan swapped it in for Alphabet on its Analyst Focus List, with a $940 price target.
- JPMorgan’s case is Meta’s AI-driven ad growth, which added roughly twice Google Search’s new dollars last quarter.
- Amazon is the list’s other pick, and JPMorgan says Alphabet’s AI search may take time to pay.
- The $940 target works at Meta’s usual multiple if 2028 earnings arrive, though free cash flow turned negative last quarter.
Meta Platforms (META) is up 5% today after JPMorgan analyst Doug Anmuth added it to the firm’s Analyst Focus List, keeping his Overweight rating and $940 price target.
Meta replaced Alphabet (GOOG), which JPMorgan still rates Overweight, and joins Amazon (AMZN), up 4% today, on the list.
Meta’s ads are about to pass Google Search
“Coming out of 3Q earnings, Meta’s relative advertising strength is more evident than ever,” Anmuth wrote.
Meta’s third-quarter ad revenue rose 26% to $63.1 billion. That’s an extra $13 billion, which JPMorgan estimates is roughly twice what Google Search added. Alphabet’s Search & other brought in $63.4 billion, and JPMorgan expects Meta to pass it this quarter. The bank credits AI-driven ad targeting, and price per ad rose 14%.
Search is slower to pay
Alphabet’s Search & other revenue grew 12% in the third quarter, down from 19% in the first. JPMorgan also flagged Alphabet’s second straight quarter of negative free cash flow.
Amazon, the list’s other pick, gets there through the cloud. AWS revenue grew 39% to $46.0 billion last quarter, and CEO Andy Jassy pointed to “projected revenue growth rates of over 40% both in 2027 and in 2028.” But Amazon’s free cash flow was a $42.4 billion outflow over the twelve months to Sept. 30, so it needs that growth to turn back into cash.
TIKR tracks 61 analysts on Meta Platforms. How many say “Buy”?
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Getting to $940
Analysts expect Meta’s normalized EPS to hold flat this year, then climb to $42.30 by 2028:
Even after today’s jump, Meta trades at about 20x forward earnings, below its five-year average of 21x:
$940 is about 22x those 2028 estimates, close to that average, so Meta can get there if the earnings show up. The risk is the cash: third-quarter capex of $34.9 billion was more than Meta’s $32.8 billion of operating cash flow.
Still, I think JPMorgan picked the right horse. Ads growing this fast can pay for a lot of spending, and at 20x, the stock isn’t priced for much of a payoff. The next test comes in late January, when Meta sets out its 2027 capex plan.
So what is Meta stock actually worth?
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