Wall Street gets more bullish on Meta after layoffs report: ‘Zuck going for it’

Wall Street analysts are growing more bullish on Instagram and WhatsApp owner Meta Platforms after Reuters reported that the company is planning sweeping layoffs tied to rising artificial intelligence costs. The report, published last Friday and citing three sources familiar with the matter, said Meta is planning layoffs that could affect 20% or more of the company. Meta’s employed about 79,000 workers as of Dec. 31, according to its latest regulatory filings. Any layoffs would attempt to both offset AI infrastructure costs and allow room for greater efficiency from AI-assisted workers, the report said. Across Wall Street, analysts applauded Meta CEO Mark Zuckerberg’s new focus on generative AI. “Meta reportedly looking to cut 20% of the workforce could be trimming Covid-related bloat, but Meta has already leaned out,” Bernstein analyst Mark Shmulik said. “Given Mr. Zuckerberg’s track record, a pivot to an AI-centric organization is worth paying attention to.” Over the past year, Meta has poached top AI researchers by offering pay packages worth hundreds of millions of dollars. “Zuck going for it, and that’s good for AI semis: Mark Zuckerberg is going for it in AI. He’s been hiring and acqui-hiring like crazy, cutting chip deals and even making more room to spend on AI with big cost cutting moves it seems,” wrote Melius Research analyst Ben Reitzes. “As he saves more money by using AI internally and generates more revenue using it to boost ads, we wouldn’t be surprised to see further upside to Meta’s obscene capex spending throughout the rest of the decade.” Jefferies analyst Brent Thill similarly highlighted the move as Meta transforming “from hype to efficiency.” “Meta’s reported ~20% headcount reduction would reinforce that AI is beginning to deliver real productivity gains at scale, while helping offset a significant AI capex ramp,” he said. Bottom line: most analysts maintained their long-term bullish stance on Meta. Here’s what analysts at some of Wall Street’s leading researchers had to say. Morgan Stanley: overweight rating, $825 price target The bank’s price target implies about 35% upside from Meta’s Friday close of $613.19. “META is latest in series of big tech companies beginning to drive further efficiency from GenAI-related tools. Reports suggesting 20% workforce cuts could represent 5-10% upside to '27 EBIT, provide higher EBIT floor through investment and torque as revenue investments yield.” JPMorgan: overweight, $825 “We have viewed Meta as higher reward/higher risk than other mega-cap names. Advertising revenue growth of 30% off a very big base is extremely impressive, and management seems confident that its AI-driven ad product pipeline can sustain strong growth. But given the magnitude of investments, there is little margin for error, or room for much beyond modest deceleration.” Wells Fargo: overweight, $856 Wells Fargo’s 12-month price target corresponds to upside of 40%. “Meta is making a ~$500B+ bet on compute capacity to lead in consumer AI applications. Press headlines on model delays and potential 20% headcount reduction suggest execution and timing remain key risks to the payoffs from this investment cycle.” Bank of America: buy, $885 The bank’s target calls for 44% future upside. “We think the report underscores both the higher costs of AI infrastructure but also cost benefits to R & D heavy companies from coding and other efficiencies. Assuming a conservative marginal avg. cost per employee of ~$500k, potential restructuring could yield ~$7-8bn in annualized savings, which could reduce a portion of the $45bn in GAAP expense growth in our 2026 model. Based on cost commentary in the article, we do not expect Meta to materially lower its FY26 expense guide of $162-$169bn, though we view the report as suggesting cost discipline at Meta vs outlook.” Bernstein: outperform, $900 Bernstein’s target is 47% above Meta’s Friday closing price. “Meta’s probably the best placed incumbent to pivot to an AI-enabled org of the future. Recall the speed at which the company did a 180 post pandemic and returned to their engineering roots by trimming non-technical roles and ‘flattening’ management layers. Meta has the muscle memory, the internal proof points and a leader that has seen success in the last big re-org — why wouldn’t they be at the forefront to rebuild the company from the ground up to be ‘AI proof’?” Jefferies: buy, $1000 Jefferies’ price objective is 63% higher than Meta’s last close. “Meta’s reported ~20% headcount reduction would reinforce that AI is beginning to deliver real productivity gains at scale, while helping offset a significant AI capex ramp. The takeaway is not just better Meta margins, but a broader readthrough for tech/software as investors reassess the link between headcount, growth & profitability. Every $1B of expense reduction adds ~$0.4 to our FY26 EPS. META remains our top pick.” Needham: hold The firm did not provide a price target for the stock. “We believe there are several AI risks specific to META, that are not shared by other hyperscalers … A common question we get from META shareholders is — Should META cut its CapX spending? Although we wish META’s ROIC goals for its AI investments were shorter-term, our answer is ‘NO.’” Melius Research The firm did not provide a rating or price target. “More broadly, Meta’s infrastructure ramp reinforces the view that hyperscaler AI capex will remain the dominant driver across semiconductors and networking through the rest of the decade. The scale of spending from Meta, alongside [ Amazon Web Services], Microsoft , Google , and Oracle , flows directly into the AI supply chain spanning compute, networking and optical interconnect.”