By Angela Palumbo

Meta Platforms stock has more room to run as artificial intelligence initiatives and monetization opportunities lie ahead, according to one Baird analyst.

Colin Sebastian slightly lowered his price target for Meta to $815 from $820 on Tuesday -- but reiterated an Outperform rating on the stock and wrote in a research note that now could be the time to buy.

Sebastian's current price target implies a 23% gain from the stock's Monday closing price of $661.50.

"Reviewing the current bull vs. bear battleground for Meta, we acknowledge further near-term risks to sentiment, but believe embedded expectations are in better balance vs. three months ago, and encourage investors to be opportunistic buyers," Sebastian wrote.

Meta stock has risen 13% this year to about $664, just underperforming the S&P 500's 17% increase. Shares have dropped 16% from their record close of $790 on Aug. 12.

Shares fell 11% on Oct. 30 after Meta reported mixed third-quarter financials. Management also disclosed shrinking margins and raised its forecast for spending on AI infrastructure.

Some investors are also concerned that Meta is falling behind on its AI initiatives compared to other tech companies, and worry about growing competition in the social media space, especially as TikTok sticks around in the U.S.

"The concern we hear most frequently from investors is that Meta is lagging in AI, and there is limited visibility in terms of showing clear improvement," Sebastian wrote. "This is feeding other concerns, such as Meta is at risk of losing more ground as user activity online consolidates towards [large language models], which could lead to multiple years of slowing growth and margin pressure."

Sebastian is more optimistic about where Meta -- and its stock -- could go in the new year. Specifically, the analyst is hopeful that the upcoming launches of Meta's new AI models could improve the company's AI offerings. When it comes to top-line performance, Sebastian is confident that Meta's advertising business still can grow, especially as AI boosts ad relevance and after platforms like WhatsApp welcomed ads for the first time.

"We believe that mixed sentiment on Meta could persist through the first part of 2026, especially with some lingering questions on the out-year margin trajectory. However, we think the pendulum may be swinging a bit too far in the negative direction, and that the narrative on the stock can shift more positively once again next year," Sebastian wrote.

Shares of Meta were up 0.3% on Tuesday, while the S&P 500 was rising 0.4%.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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December 23, 2025 14:30 ET (19:30 GMT)

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