Meta's (META) Outlook Is Upbeat, Despite Significant Challenges, Investment Bank Says

Investment bank DA Davidson believes that Meta (META) is facing significant challenges. However, it kept its $650 price target and Buy rating on META stock.

Meta's Key Challenges

The decelerating growth of the U.S. economy is expected to negatively impact Meta's digital ad revenue. Further, the investment bank believes that Meta is trailing its peers when it comes to developing its open-source AI initiative.

Finally, DA Davidson is concerned about the extent of the company's spending.

Why DA Davidson Remains Bullish on META Stock

The shares can climb if the company manages its expenses effectively, according to DA Davidson. Further, the investment bank indicated that the company can continue to grow going forward despite the macroeconomic challenges.

Another Investment Bank Recently Slashed Its Price Target on META

Benchmark recently cut its price target on the name to $640 from $820. Benchmark, which kept a Buy rating on the shares, is worried about the company's near-term outlook.

However, the investment bank still thinks that the company's competitive advantages will enable it to perform well over the long term.

While we acknowledge the potential of META, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.