Meta 'Peak Pressure' Priced In As Valuation Gap With Alphabet Narrows, Analyst Sees Nearly 40% Upside

Analyst identified Meta Platforms Inc. (NASDAQ:META) as a potential buying opportunity due to its significant discount relative to Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG). The analysis suggests that Meta’s new AI model could soon close the valuation gap.

Meta Selloff May Be Overdone

Despite being a part of the Magnificent Seven tech stocks, Meta has seen a significant drop in share value since its last earnings call, primarily due to concerns about excessive spending on AI infrastructure, according to a report by MarketWatch.

This has led to a substantial gap in the forward price-to-earnings ratio between Meta and Alphabet, with Meta trading at a 20.1x forward earnings compared to Alphabet’s 28.3x.

Jefferies analyst Brent Thill believes that this negative sentiment has been overblown and the “peak pressure”  has already been priced in. He stated that Meta’s new text and image artificial-intelligence models, expected to be released in the first half of 2026, could be a turning point for the company.

These models are anticipated to demonstrate the value of Meta’s high-profile AI hires and could potentially shift the narrative around the company’s AI capabilities.

Thill also pointed out that Meta’s recent budget cuts in its metaverse division indicate a focus on cost control. Additionally, the company’s use of AI to optimize ad performance has led to increased engagement across its platforms.

The analyst highlights strong upside for WhatsApp, noting that it has the largest daily active user base among Meta's apps yet remains under-monetized. He projects the platform's revenue could increase fourfold by fiscal 2029.

Despite the recent pullback, Thill reiterated a buy rating and a $910 price target for Meta, implying nearly 40% upside from current levels.

Meta AI Focus and Threads Growth

Eric Lynch, the managing director and co-portfolio manager at Suncoast Equity, echoes the same and believes that Meta’s decline is “self-inflicted” and that the company’s strategic focus on implementing AI across all its properties and lowering capex will drive growth.

Meanwhile, a new report shows that Meta’s Threads app is seeing strong daily user growth, while X from Elon Musk‘s xAI is falling behind. This indicates that despite the recent stock decline, Meta’s user base and engagement are still growing, which could be a positive sign for the company’s future performance.

Meta holds a value rating of 42.82% and a quality rating of 94.84%, according to Benzinga's Proprietary Edge Rankings. Benzinga’s screener allows you to compare Meta’s performance with its peers.

Price Action: Since the beginning of 2026, Meta’s stock fell 6.1% until Wednesday, as per data from Benzinga Pro. On Thursday, it recovered most of its losses and closed 5.66% higher at $647.63.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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