Currently, it is a "buy on dips" opportunity! Baird reiterates its "outperform" rating on Meta (META.US) and slightly lowers its target price to $815.

Despite recent market sentiment pressures, Baird analysts remain optimistic about the medium to long-term performance of Meta Platforms (META.US), believing that the advancement and monetization opportunities of artificial intelligence (AI) will provide further upside potential for the stock price. On Tuesday, Baird analyst Colin Sebastian slightly lowered Meta's price target from $820 to $815 but reiterated an "Outperform" rating on the stock, stating that the current time may be a "buying opportunity." Based on the closing price of $661.5 on Monday, the new target price still implies a potential increase of about 23%. Sebastian pointed out that the bullish and bearish game on Meta continues, and short-term sentiment may face further volatility. However, compared to three months ago, the market's implied expectations for the company have become more balanced, allowing investors to position themselves during the phase of temporary pullback. Since the beginning of the year, Meta's stock price has risen by about 13%, slightly lower than the approximately 17% increase in the S&P 500 index during the same period. However, since reaching a historic closing high of $790 on August 12, the stock price has fallen by about 16%. The third-quarter results announced by the company on October 30 were mixed, with management disclosing a decline in profit margins and an increase in AI infrastructure investment expectations, leading to an 11% drop in the stock price that day. Market concerns mainly focus on two points: first, compared to other tech giants, Meta may be falling behind in AI advancement; and second, intensified competition in social media, especially with TikTok continuing to gain market share in the US. Sebastian mentioned in the research report that the most common concern among investors is that Meta's improvement path in AI is not clear enough, which may bring about a slowdown in growth and pressure on profit margins as user activity shifts towards large language models. However, Sebastian is more optimistic about next year's outlook. He is bullish on the new generation AI models that Meta is about to launch, believing that they have the potential to enhance the company's AI capabilities. On the revenue side, the advertising business still has growth potential, with AI improving ad relevance, and platforms including WhatsApp introducing ads for the first time, opening up new monetization opportunities. Sebastian said, "We believe that the divisive sentiment surrounding Meta may continue until early 2026, especially regarding doubts about the medium to long-term profit margin path. But the current market's negative bias may have been slightly excessive, and with a narrative improvement next year, the stock price is expected to turn positive again."