Wells Fargo Raises Meta Stock Target to $1,000, But Warns 2027 Earnings Could Hit a Trough

Wells Fargo has raised its price target for Meta Platforms (NASDAQ: META) to $1,000 from $796, maintaining an Overweight rating and becoming one of the most bullish major Wall Street calls on the stock. The target implies roughly 35% upside from Meta’s October 6 closing price of $738.88. 

But the bullish target comes with an important warning: 2027 could be a difficult year for Meta’s earnings as the company spends heavily on artificial intelligence infrastructure before its new Muse AI business generates meaningful revenue.

That apparent contradiction is central to Wells Fargo analyst Ken Gawrelski’s latest view. The investment case is not based on Meta delivering spectacular earnings immediately. Instead, it rests on the possibility that the company is entering another major product cycle in which heavy investment today produces much larger AI-driven revenue later.

Why Wells Fargo Raised Meta’s Target to $1,000

Wells Fargo’s new $1,000 target represents a substantial increase from its previous $796 target. The firm has also kept its Overweight rating on the stock.

The main reason is Muse, Meta’s new personal AI agent launched in September.

Meta describes Muse as an AI agent designed to do tasks rather than simply answer questions. It can work across connected applications, handle projects and assist users through a dedicated secure virtual machine. Meta has also said Muse is being brought to AI glasses and is being expanded toward business applications. 

For Wells Fargo, early enthusiasm around Muse is justified. The bank sees the product cycle as potentially more important than a conventional new feature because it could create a new way for Meta to monetize its enormous user base.

That is particularly significant because Meta already operates one of the world's largest digital advertising businesses.

The Catch: 2027 May Be a Weak Earnings Year

The most interesting part of the Wells Fargo call is that the bank is not expecting Muse to immediately transform Meta's earnings.

Instead, Gawrelski expects 2027 to potentially become a trough year for earnings as spending rises faster than AI revenue.

Wells Fargo estimates Meta's 2027 operating expenses could reach approximately $210 billion to $215 billion, compared with a Wall Street estimate of around $202 billion. The firm's 2027 EPS estimate is around $31-$32, below consensus of roughly $34. 

This means investors could face a period in which Meta's business remains fundamentally strong, but earnings growth looks less impressive because the company is aggressively funding its next stage of AI expansion.

For investors focused only on next year's profits, that could be uncomfortable.

For long-term investors, however, Wells Fargo is effectively asking the market to look beyond 2027.

Meta's AI Spending Is Becoming the Bigger Story

Meta's existing financial results show why the spending issue matters.

In the second quarter of 2026, Meta generated $60.8 billion in revenue, up 28% year over year. However, total costs and expenses jumped 55% to $42.0 billion. Operating income declined 8%, while diluted EPS fell 13% to $6.18. 

The company spent approximately $31.1 billion on capital expenditures during the quarter, including principal payments on finance leases.

Meta's own 2026 outlook calls for capital expenditure of $130 billion to $145 billion and total expenses of $165 billion to $169 billion.

Wells Fargo's 2027 estimates point to an even more aggressive investment cycle, with capital expenditure approaching roughly $249 billion-$250 billion.

That would represent a dramatic increase in spending on data centers, computing infrastructure and other AI-related capacity.

The key question for investors is therefore no longer simply whether Meta can build AI infrastructure. It is whether the infrastructure eventually generates enough high-margin revenue to justify the enormous upfront investment.

Meta Could Give Up $5 Billion in Potential High-Margin Revenue

One of the more unusual changes in Wells Fargo's forecast concerns Meta's computing capacity.

The bank removed about 500 megawatts of expected 2027 capacity resales, equivalent to roughly $5 billion of potential high-margin revenue, from its model. The reasoning is that Meta may need that computing capacity itself to support Muse and its broader AI ambitions. 

That creates a near-term earnings trade-off.

Meta could potentially monetize some excess computing capacity by selling or reselling it. But if the company instead uses that capacity internally to build its own AI products, it sacrifices near-term revenue in exchange for potentially much greater long-term value.

This is one reason the Wells Fargo thesis is unusual: a weaker near-term earnings outlook is actually part of the bullish long-term argument.

Could Muse Become Another Reels-Style Investment Cycle?

Wells Fargo's thinking draws a parallel with Meta's previous investments in Reels.

When Meta pushed heavily into short-form video, the company initially faced questions about monetization and competition. Over time, Reels became an important part of Instagram's engagement and advertising ecosystem.

Wells Fargo appears to see a similar possibility with Muse: significant investment first, followed by monetization later.

The difference is that AI could potentially create entirely new revenue streams rather than simply improving advertising engagement.

Meta has already started expanding its AI ambitions beyond consumer products. In September, it launched the Meta Enterprise Platform, bringing products such as Muse, Muse API, Muse Code and Meta Business Agent to businesses and developers. 

That gives Meta multiple potential avenues for future AI monetization.

Why 2028 Matters More Than 2027

The Wells Fargo thesis ultimately depends on what happens after the spending-heavy period.

The firm expects more meaningful AI-related financial contributions from 2028 onward, while its 2027 EPS estimate has been reduced. Its reported 2028 EPS estimate was raised to approximately $40.02. 

In simple terms, the forecast looks something like this:

2026: Strong advertising business + rapidly rising AI investment
2027: Heavy infrastructure spending + limited Muse monetization = potential earnings trough
2028 and beyond: Greater AI monetization potentially begins to offset the investment burden

That is why the $1,000 target should not be interpreted as a prediction that Meta will suddenly produce spectacular profits next year.

It is a valuation based on the possibility that today's infrastructure spending creates a much larger AI business in the years ahead.

What Investors Should Watch Next

Meta's upcoming earnings commentary could be particularly important.

Investors will want to hear how management describes 2027 capital expenditure, operating expenses, data-center requirements and the pace at which Muse can become a meaningful revenue generator.

The company's advertising engine also remains crucial. In the second quarter, ad impressions across Meta's Family of Apps increased 14% year over year, while average price per ad rose 12%. 

That underlying cash-generating business is what gives Meta the financial capacity to fund its AI ambitions.

The biggest risk is that AI spending continues to rise while monetization takes longer than expected. A second risk is valuation: even strong long-term AI prospects may not protect the stock if investors become unwilling to pay a premium for future earnings.

There is also execution risk. Building massive computing infrastructure does not automatically guarantee that Muse becomes a major consumer or enterprise business.

Meta Stock Outlook: Bullish Long Term, More Complicated in 2027

Wells Fargo's $1,000 Meta price target is bullish, but its earnings forecast is surprisingly cautious.

The message to investors is essentially that Meta may have to sacrifice some near-term profitability to build its next major growth engine. The removal of roughly $5 billion in potential capacity-resale revenue and expectations for more than $210 billion in 2027 operating expenses highlight the scale of that trade-off. 

For Meta shareholders, the critical question is whether Muse can follow the path of products such as Reels and turn heavy investment into a durable, high-margin business.

The next major signals will be Meta's 2027 spending plans, Muse adoption and monetization, advertising growth and evidence that the enormous AI infrastructure build-out is beginning to produce financial returns.

Meta's $1,000 target is therefore less a call on 2027 earnings and more a bet on what the company can earn after the current AI investment cycle matures.

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This article is for informational and educational purposes only and should not be considered investment advice.