Meta Platforms (NASDAQ: META) has been named the top large-cap long idea by Evercore analyst Mark Mahaney, who pointed to AI-driven advertising momentum and an attractive valuation as key reasons for his conviction.
Mahaney made the call on July 22, arguing that advertising demand and AI-powered ad improvements would continue to fuel strong revenue growth for the social media giant.
His bullish case faced an immediate test when Meta released an earnings report one week later that disappointed markets, sending shares down roughly 10% in a single trading session.
Despite the sharp selloff, Mahaney reiterated his expectation that the stock would outperform, though he trimmed his price target from $930 to $820 in response to the results.
Meta’s underlying business metrics remain formidable, with its platforms averaging 3.6 billion daily active users across its brands in June 2026, one of the largest user bases in the technology sector.
Revenue surged 28% year over year to $60.8 billion in the second quarter of 2026, while ad impressions grew 14% year over year, underscoring the platform’s continued commercial strength.
The stock trades at just 20 times trailing earnings and 17 times forward earnings, making it the second-cheapest among the so-called Magnificent Seven tech companies, with only Alphabet carrying lower multiples.
However, the primary concern weighing on investor sentiment is the scale of Meta’s AI spending, with costs and expenses jumping 55% year over year to $42 billion in the second quarter alone.
Meta also raised its 2026 capital expenditure guidance to between $130 billion and $145 billion, up from a prior low-end estimate of $125 billion, signaling that AI investment is not slowing.
CEO Mark Zuckerberg and other executives have provided limited concrete updates on the progress of the company’s frontier AI models, and the firm has delayed multiple rollouts, including its Avocado system and Muse Spark model.
Unlike other major hyperscalers investing heavily in AI infrastructure, Meta does not currently operate a business selling computing capacity to third parties, a distinction that makes its spending trajectory harder to justify to skeptical investors.
Mahaney counters that Meta’s positioning in performance-driven ad budgets remains strong, and that AI-enabled improvements in automation, targeting, and conversion will continue to support results.
He also argues that the company’s financial profile, characterized by mid-20s percent revenue growth and mid-30s percent operating margins, makes its current valuation compelling relative to peers.
The tension between Meta’s heavy AI cost base and its robust advertising business will likely define how the stock performs over the remainder of 2026 and into the following year.
