Wall Street Sees Upside for META as Metaverse Budget Faces Major Trim

Meta Platforms, Inc. (NASDAQ:META) is one of the Must-Watch AI Stocks on Wall Street. On December 4, Mizuho analyst Lloyd Walmsley reiterated an Outperform rating on the stock with an $815.00 price target. The rating affirmation follows potential cuts to Metaverse; which signal upside for Meta and could potentially add $2/share to 2026 EPS.

A Bloomberg report from December 4 has revealed that Meta CEO Mark Zuckerberg is expected to meaningfully cut resources for building metaverse; Zuckerberg’s idea of a digital realm where people would work, socialize, and spend much of their life.

*”We see a significant rally ahead for Meta shares, and recommend investors add to positions, after the 5% move today, in light of multiple press reports the company planned to cut up to 30% out of Metaverse spending and was asking managers to identify broader cuts across the company.”

The firm believes that these cuts would drive a major surge in the shares. As per the report, the cuts would impact Meta Horizon Worlds and the Quest virtual reality unit, leading to layoffs as early as January.

The firm acknowledges that these cuts looks positive. However, it is the degree of incremental upside which remains uncertain.

“Metaverse cuts of this magnitude could add ~$2/share to our 2026 EPS of $29.50, with Reality Labs losses of ~$5.85 per share. One key question here: How much was already contemplated in the 2026 guide?

We suspect some of this is incremental but, ultimately, the plan to cut back in an area perceived as a black hole ($80B of cumulative operating income losses since 2019) alone should give investors more confidence the move to scale up investment in Gen-AI is not a blank check forever.”

Meta Platforms has been expanding its advertising capabilities and also invests heavily in artificial intelligence and the metaverse.

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