Meta Stock: Wall Street Sees 34% Upside as AI Bet Takes Shape

TLDR

• Meta began laying off roughly 8,000 employees on May 20, about 10% of its global workforce, with more cuts expected later in 2026.
• The cuts are designed to redirect spending into AI infrastructure, with capex guidance raised to $125–$145 billion for 2026.
• Q1 2026 revenue hit $56.31 billion, up 33% year-over-year, with a 41% operating margin.
• META trades at around 20x forward earnings, below its five-year average of ~23x.
• Wall Street holds a “Moderate Buy” consensus with an average price target of $840.19.

Meta Platforms (META) opened at $610.26 on Tuesday. The company is cutting headcount and converting those savings directly into AI infrastructure — and the numbers back it up.

Meta Platforms, Inc., META

On May 20, Meta began laying off roughly 8,000 employees, around 10% of its global workforce. The company also canceled plans to fill 6,000 open positions, bringing the total effective reduction to about 14,000 roles. Chief People Officer Janelle Gale told staff the cuts are designed to “run the company more efficiently” and offset other investments.

Bank of America estimates the layoffs will generate $7 to $8 billion in annualized savings. That’s a fraction of the total capex increase, but the structural point is clear: salaries are being converted into chips and data centers.

More cuts are expected. Meta has flagged potential additional rounds in August and the fall of 2026.

The AI Infrastructure Buildout

Meta raised its 2026 capex guidance to between $125 billion and $145 billion, up from a prior range of $120 to $135 billion. That’s nearly double the $72.2 billion spent in 2025 and almost four times the $39.2 billion spent in 2024.

The projects are concrete. Meta is building Prometheus, a one-gigawatt AI supercluster in Ohio, and Hyperion, a 2,250-acre data center campus in Louisiana. In Q1 2026 alone, the company booked $107 billion in new cloud and infrastructure commitments.

The money is going into data centers, GPUs, and the infrastructure behind Meta’s Llama AI models and recommendation systems.

Meta also announced a $125 million semiconductor hub at UCLA alongside Broadcom and Synopsys, aimed at long-term AI chip development.

Q1 Results and Valuation

The financials aren’t soft. Q1 2026 revenue came in at $56.31 billion, up 33.1% year-over-year — the fastest quarterly growth since 2021. Operating income held at a 41% margin despite total costs rising 35%. Net income was $26.8 billion, which included an $8.03 billion one-time tax benefit.

Meta guided Q2 2026 revenue between $58 billion and $61 billion. Management also committed that 2026 operating income will exceed 2025 levels, even with the capex ramp.

EPS for the quarter came in at $10.44, well ahead of the $6.67 analyst consensus.

META currently trades at around 20x forward earnings. That’s below its own five-year average of roughly 23x and slightly below the S&P 500’s current forward multiple of around 22x.

Lockheed Martin Investment Management boosted its META position by 147.1% in Q4, adding 59,770 positions to reach 100,400, worth approximately $66.3 million. Institutional investors now own 79.91% of the company.

On the insider side, CTO Andrew Bosworth sold 7,847 positions on May 18 at an average price of $607.83 under a pre-arranged 10b5-1 plan, primarily to cover tax obligations on vested equity.

Wall Street holds a “Moderate Buy” consensus on META, with 34 Buy ratings, four Strong Buys, and nine Hold ratings. The average price target sits at $840.19.

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