Morgan Stanley Maintains Meta Overweight, Sets $775 Price Target on AI Compute Strategy

Morgan Stanley maintained its overweight rating on Meta on July 1, setting a $775 price target, implying 37.6% upside from the $563.29 closing price. The investment bank believes Meta is more likely to pursue renting out spare GPU capacity rather than building a full-stack cloud service competing with AWS.

Morgan Stanley estimates that renting 250 megawatts of capacity at $40 per watt annually would increase 2028 earnings per share by approximately 8%, scaling to 33% accretion at 1,000 megawatts. The bank projects Meta's self-owned computing capacity will expand to 1.9 gigawatts in 2026 and 3.4 gigawatts in 2027, providing capacity for compute rental. Morgan Stanley set 2027 capital expenditure guidance at $175 billion, noting potential upside if cloud services scale.