Morgan Stanley raised its target price on Meta (META.US) to $850, with GPU algorithm optimization driving profits beyond expectations.

Meta Platforms Inc. (META.US), as one of the recent hotly discussed artificial intelligence concept stocks on Wall Street, has once again attracted market attention. On July 31st, Morgan Stanley analyst Brian Nowak released a new research report, raising Meta's target price from $750.00 to $850.00 and maintaining a "hold" rating. The report pointed out that Meta's continuous improvement in GPU algorithms has become a key factor driving its user engagement and profitability levels beyond expectations. This technological advantage has been fully validated in the company's actual performance in the second quarter and third quarter performance guidance. Specifically, GPU-supported algorithm optimizations have not only improved user interaction experience but also directly led to an increase in monetization efficiency, exceeding market expectations. Data shows that Meta's second-quarter revenue was $47.52 billion, a 22% year-over-year increase, better than market expectations; diluted earnings per share were $7.14, a 38% year-over-year increase, also exceeding market expectations. Meta expects third-quarter revenue to be between $47.5 billion and $50.5 billion, with the midpoint of that range exceeding analysts' average expectations of $46.2 billion. Furthermore, Meta has raised the lower end of its 2025 capital expenditure forecast range, as the company continues to invest heavily in talent, infrastructure, data centers, and energy to remain competitive in the rapidly growing artificial intelligence competition. The company currently expects spending this year to be between $66 billion and $72 billion. Based on the recognition of Meta's technology-driven profitability, Morgan Stanley has adjusted its financial forecast for the next two years: estimating that revenue in 2025 will be increased by about 3% compared to the original forecast, with the increase in revenue for 2026 expanding to 4%; during the same period, earnings per share (EPS) are expected to increase by 5% and 9%, with the growth momentum mainly coming from operational efficiency improvements brought about by algorithm optimizations. The report further emphasizes that Meta is currently increasing its investment in core business and long-term projects simultaneously. It is worth noting that the continuous improvement of its core business not only provides stable funding support for long-term strategic projects, but also further solidifies profitability through technological iterations and operational optimization, forming a virtuous cycle of "core business feedback to long-term layout." The clarification of this strategic layout has become an important basis for Morgan Stanley's target price increase.