Needham Upgrades Meta Platforms (META) Stock to Hold

Meta Platforms, Inc. (NASDAQ:META) is one of the Top 10 Stocks to Buy According to Lakehouse Capital. On July 3, Needham upgraded the company’s stock to “Hold” from “Underperform” with no price target, as reported by The Fly. The firm had maintained its cautious stance, highlighting strategic concerns and structural cost pressures. The channel checks have been driving the upside to the estimates, while the firm also highlighted Meta Platforms, Inc. (NASDAQ:META)’s strong labor productivity metrics. Furthermore, it noted the company’s globally scaled, software-only model, benefiting from closed-loop attribution for advertisers.

Despite the upgrade, Needham warned that the company’s strategy diffusion wastes capital and adds risks. There are concerns related to the persistent margin and FCF pressures, with Meta Platforms, Inc. (NASDAQ:META)’s stock-based compensation per full-time employee (SBC/FTE) being the highest among peers. The company’s headcount was 76,834 as of March 31, 2025, reflecting a rise of 11% YoY. For Q1 2025, the company stated that Ad impressions delivered throughout the Family of Apps rose 5% YoY, while average price per ad increased 10% YoY.

Macquarie Asset Management, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:

“The largest individual detractors from performance relative to the benchmark were not owning Meta Platforms, Inc. (NASDAQ:META), not owning Eli Lilly & Co., and our position in Electronic Arts Inc. Meta stock was slightly negative to end the quarter but relative to the benchmark and other communication services stock performed well. Having a zero weight relative to the large benchmark allocation hurt. We continue to follow this company closely and while we have become incrementally more constructive, we still have lingering concerns about the business model and worry the cyclical weakness in advertising spend could create further pressure.”

While we acknowledge the potential of META as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now

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