Meta Platforms (NASDAQ: META) received a downgrade from Wall Street on Thursday, March 5, due to concerns regarding its ability to keep up with the demands imposed by the artificial intelligence (AI) sector.
Notably, Arete analyst Rocco Strauss downgraded the tech giant from ‘Buy’ to ‘Neutral’, citing skepticism in Meta’s prospects of turning AI spending into meaningful revenue.
According to Arete’s analysis, Meta’s spending trajectory is rising quickly, but revenue growth is not really up to speed. This, the firm argued, could pressure margins. Accordingly, Strauss slashed his Meta stock price target from $732 to $676.
Is Meta lagging behind the competition?
In its fourth-quarter 2025 earnings report, the company said it expects to spend between $115 billion and $135 billion in 2026, significantly higher than the $72.2 billion in capital expenditure in 2025.
CEO Mark Zuckerberg was also optimistic, promising changes conducive to further growth.
“This is going to be a big year for delivering personal superintelligence, accelerating our business, building infrastructure for the future, and shaping how our company will work going forward,” said Zuckerberg in the earnings call.
However, Arete highlighted that projected capital expenditures are significantly up from $72.2 billion in 2025. The key reason for concern, however, is that the company appears to be lagging behind competitors like Alphabet (NASDAQ: GOOGL in third-party demand.
Similarly, Arete cautioned that Meta’s current spending cycle may reverse the cost discipline implemented after 2022. In other words, as the company ramps up investments in AI, it actually weighs on its long-term financial health.
Meta stock price target
Following Arete’s price cut, the average Meta share price target for the next twelve months has gone down to $858,86, meaning that Wall Street collectively expects the stock to go up around 28% during that period, citing TipRanks data.
The recent price cut thus appears to have had no substantial impact on the sentiment, and the stock is still a ‘Strong Buy’ according to forty-four analysts who’ve weighed in on Zuckerberg’s firm in the past three months.
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