• Meta (META) shares rally 10.4% as Wells Fargo (WFC) raises price target to $796, citing AI progress.
  • Company unveils 'Petal' subsea cable linking U.S. and France, boosting infrastructure ambitions.
  • Investors eye Meta Connect on September 23, 2026, for updates on Muse AI product and monetization.

Meta Extends Gains as AI Narrative Strengthens

Meta Platforms Inc. shares climbed 10.4% on Thursday, extending a rally that has been building over recent sessions. The move comes as a confluence of bullish developments—an analyst upgrade, a major infrastructure announcement, and anticipation ahead of the company’s Meta Connect event—converged to lift investor sentiment.

Wells Fargo raised its price target on Meta to $796 from $640, maintaining an Overweight rating. The bank cited progress in Meta’s artificial intelligence efforts, applying a higher 25× multiple to estimated 2027 earnings. The revision helped spark a risk-on reaction across mega-cap tech, with the Nasdaq also providing a supportive backdrop.

Petal Cable and Infrastructure Push

Meta also announced “Petal,” described as the first petabit-capacity subsea cable across an ocean, linking the United States and France. The project underscores Meta’s ambition to own more of the network and compute infrastructure underpinning its AI and global platform ambitions. The cable could enhance capacity and resilience for cross-border data traffic, though regulatory approvals and operating details remain undisclosed.

Fundamental Strength and Spending Risks

The rally rests on a solid fundamental base. In the second quarter, Meta reported revenue of $60.8 billion, up 28% year over year, with advertising revenue contributing $59.4 billion, up 27%. Family daily active people reached 3.60 billion, up 3%, while ad impressions rose 14% and average price per ad increased 12%, indicating strong advertiser demand and improving monetization.

However, profitability metrics showed pressure. Operating income fell 8% to $18.8 billion, and net income declined 14% to $15.8 billion, partly due to legal and restructuring costs. Capital expenditures soared to $31.1 billion in the quarter, and management guided 2026 capex to $130–145 billion as it builds out AI data centers. Free cash flow, traditionally a hallmark of Meta’s cash generation, narrowed to just $784 million after accounting for capex and finance-lease payments.

AI Monetization in Focus Ahead of Meta Connect

Investors are positioning ahead of Meta Connect on September 23, 2026, where the company is expected to showcase its Muse personal-AI product. The event could provide critical evidence on whether AI can drive engagement and advertising monetization. Analysts will also look for updates on Meta’s in-house AI chips and data-center efficiency.

The bull case hinges on Meta’s ability to distribute AI products to billions of users and fold them into its mature advertising platform. “Meta’s scale gives it a unique advantage in deploying AI at consumer scale,” said one portfolio manager, speaking on condition of anonymity. “But the market needs to see tangible returns on the massive infrastructure spend.”

Regulatory and Competitive Landscape

Meta continues to face privacy, competition, and youth-safety scrutiny across multiple jurisdictions. The company has noted several U.S. youth-related trials scheduled for 2026. While an $18 billion legal settlement earlier this year removed a prominent overhang, regulatory risks remain.

Competitively, Meta is often compared with Alphabet (GOOG), which has also invested heavily in AI. Some investors see the clearing of legal overhangs plus new AI products as analogous to Alphabet’s post-antitrust rebound, though Meta’s spending trajectory is steeper.

Market Context and Outlook

Thursday’s gain extends a rebound from an August low, with the stock up roughly 22% since then. Bloomberg reported four trough-to-peak rallies of at least 20% during 2026, with shares essentially flat year to date as of mid-September and lagging the Nasdaq 100. A sustained break above $700 would help validate a more durable uptrend, according to one investment manager cited by Bloomberg.

The next major catalyst is Meta Connect, where investors will seek clarity on AI product adoption, advertising lift, and capital spending returns. Beyond that, the trajectory of free cash flow and regulatory developments will likely dictate whether the current enthusiasm can be sustained.

Correction: An earlier version misstated the percentage gain in Meta shares. It has been corrected to 10.4%.