- Evercore ISI removed Meta from its TAP Outperform List, though it maintained an Outperform rating.
- The firm cut its price target to $820 from $930, citing rising AI spending and limited visibility on future capex.
- The move came despite Meta's solid Q2 results, which modestly beat expectations.
Evercore ISI analysts pulled Meta Platforms from their TAP Outperform List on Wednesday, while keeping an Outperform rating on the stock. The firm slashed its price target to $820 from $930, reflecting concerns over escalating AI expenditures and a murky path to monetization.
"Meta's Q2 was solid, but the capex trajectory and lack of clear AI revenue visibility give us pause," the analysts wrote in a note. They highlighted that capital spending is expected to rise significantly as the company invests in AI infrastructure, yet the payoff remains uncertain.
The downgrade from a top-pick status—though not a full rating cut—signals a shift in near-term sentiment. Meta shares fell 2.3% in morning trading following the note.
Meta reported second-quarter results that modestly topped analyst estimates, driven by strong ad revenue. However, the company's forward guidance on capital expenditures overshadowed the beat. Meta now expects full-year capex in the range of $37 billion to $40 billion, up from prior forecasts.
Evercore's move aligns with a broader Wall Street reassessment of AI investments across big tech. While AI-driven efficiencies are seen as a long-term tailwind, analysts are increasingly wary of the upfront costs and the timeline for revenue generation.
A Meta spokesperson did not immediately respond to a request for comment.
Correction: An earlier version of this article misstated the price target change. It was cut to $820 from $930, not $830.