Meta stock is poised for 32% upside as rapid releases of the Muse Spark 1.3 model and a strategic partnership with Broadcom for custom AI chips bolster the company's long-term growth thesis.
Bank of America maintains a Buy rating with an $810 price target, suggesting 32% upside based on rapid AI model innovation and custom silicon development. The firm highlights that Meta is currently trading at a valuation discount relative to its historical average and the broader S&P 500, despite significant potential in agentic AI and infrastructure. The thesis relies on the successful execution of upcoming projects like the 'Hatch' consumer AI agent and the deployment of MTIA chips.
It is an updated model for coding and agentic tasks that is more efficient than its predecessor, using 20% fewer tool calls and 25% fewer tokens to complete engineering tasks.
Meta is trading at approximately 18 times 2027 earnings, which is lower than its historical average of 21 times and the S&P 500's current multiple of 20 times.
Broadcom is strategically positioned as a key partner in Meta's AI infrastructure build-out, specifically through the production of three generations of Meta's custom Training and Inference Accelerator (MTIA) chips. With production shipments slated for Q4 2026 and visibility into three gigawatts of deployments through 2028, Broadcom stands to benefit significantly from Meta's long-term capital expenditure in AI silicon.
Broadcom is tasked with delivering three generations of Meta's custom MTIA chips through 2027, with a partnership agreement extending through 2029.
Production shipments for the MTIA chips are expected to begin in the fourth quarter of 2026.
Alphabet's earlier bet on custom TPUs is cited as a successful model, but no direct impact from this article.
S&P 500 mentioned as valuation benchmark; Meta trades below its historical and index multiples.
Meta Platforms shares rallied 4% after Bank of America reiterated a Buy rating with an $810 price target, citing rapid AI model iteration and custom silicon progress. Analyst Justin Post notes that Meta currently trades at a discount to both its historical valuation and the broader S&P 500, suggesting significant upside as the company scales its agentic AI capabilities and infrastructure.
BofA cites Meta's aggressive AI model development, such as the Muse Spark 1.3 release, and its strategic investment in custom silicon (MTIA) as key drivers that justify a premium valuation.