Meta surges as Jefferies sets $1,000 target on AI pivot
Wall Street embraces Zuckerberg's strategy shift amid massive infrastructure spending and workforce restructuring
Meta Platforms shares climbed more than 2% in Monday trading as Wall Street analysts embraced chief executive Mark Zuckerberg's aggressive artificial intelligence strategy, with Jefferies raising its price target to $1,000 while maintaining a Buy rating.
The upgrade comes as Meta announced a landmark AI infrastructure agreement with Nebius Group worth up to $27 billion over five years, structured to provide $12 billion in dedicated AI computing capacity and an additional $15 billion for future capacity needs. The deal, which will utilize NVIDIA's Vera Rubin platform with delivery starting in early 2027, represents one of Meta's largest AI capacity contracts to date.
Jefferies' $1,000 target, up from a previous $910, implies roughly 59% upside from Meta's current trading level of approximately $628. The firm joins a growing chorus of bullish analysts, including Erste Group which upgraded the stock to Buy this month. The broader analyst community remains overwhelmingly positive, with 62 of 67 analysts rating Meta a Buy or Strong Buy, and a consensus target of $862 representing significant upside potential.
"Zuck is going for it," one Wall Street analyst noted, encapsulating the growing enthusiasm for Zuckerberg's pivot from efficiency mode to aggressive AI expansion after two years of cost-cutting that eliminated more than 21,000 positions in 2022-2023.
However, the AI offensive comes with significant workforce implications. Reports indicate Meta is considering cutting approximately 20% of its global workforce—potentially 15,000 to 16,000 positions—as part of a broader restructuring to fund its AI investments. A Meta spokesperson characterized the reports as "speculative reporting about theoretical approaches." A Meta spokesperson told The Guardian that the company continues to recruit for high-priority AI roles while making targeted adjustments elsewhere.
The scale of Meta's AI investment ambitions is unprecedented. The company plans to increase capital expenditures to between $115 billion and $135 billion in 2026, up from $72 billion in 2025, with a long-term commitment of approximately $600 billion in data center infrastructure by 2028. These investments are primarily focused on Zuckerberg's vision for "superintelligence" capabilities and integrating AI across Meta's core products, including its family of apps and Reality Labs division.
Meta's current market valuation of approximately $1.5 trillion reflects investor confidence in the company's fundamentals. The social media giant reported trailing twelve-month revenue of $201 billion with a healthy 30.1% profit margin, and its forward price-to-earnings ratio of 20.6 suggests the stock may still offer value relative to growth prospects.
The strategic calculus underlying analyst bullishness centers on two key dynamics: the potential for AI to unlock new revenue streams across Meta's massive user base of nearly 4 billion people across its platforms, and the efficiency gains from restructuring that could offset some of the heavy capital expenditures. Meta has developed its own family of in-house AI chips called MTIA as part of efforts to reduce dependence on external suppliers and control costs.
Not all analysts are convinced. Arete downgraded Meta from Buy to Neutral this month, adjusting its price target from $732 to $676, citing concerns about the scale of AI investment risks and potential pressure on free cash flow. Other analysts have questioned whether the massive infrastructure buildout will generate adequate returns, particularly given intensifying competition from Google, Microsoft, and Amazon in the AI infrastructure space.
For investors, the coming months will prove critical. Meta's ability to demonstrate tangible AI product advances that drive user engagement and monetization will be key to justifying the record capital expenditures. Meanwhile, execution on any workforce reductions will test management's ability to maintain morale and productivity during a period of strategic transition.
The Jefferies upgrade signals that at least some on Wall Street believe Zuckerberg's AI gamble—his biggest strategic bet since the company's rebranding from Facebook in 2021—will pay off. With Meta shares having experienced volatility in recent years, ranging from a 52-week low of $478.72 to a high of $795.06, the coming AI rollout period could determine whether the stock breaks out to new highs or faces renewed skepticism about the company's growth trajectory.