DB Meta July 30

Rating Company Date 30 July 2026 Buy Meta Forecast Change North America United States Reuters Bloomberg Exchange Ticker Price at 29 Jul 2026 (USD) 585.61 META.OQ META US NAS META Price target 750.00 TMT 789.46 - Internet 52-week range 525.72

Core Strength Funds the AI Build Valuation & Risks

Benjamin Black, CFA Meta’s 2Q26 results were optically messy, but the underlying business and Research Analyst outlook were considerably stronger than the initial stock reaction suggests. Revenue exceeded the high-end of guidance on an FX-neutral basis, while the 3Q Kunal Madhukar, CFA outlook implies limited deceleration against a materially harder comparison. The Research Analyst expense revision primarily reflected legal costs, and the narrower capex range accounted for improved supply visibility rather than another acceleration in infrastructure plans. Raymond Wong Research Associate The larger takeaway is that Meta’s core business has the momentum and earnings power to support its expanding AI ambitions. AI continues to drive Benjamin Hui, Esq. measurable gains across engagement, advertising performance and creative, Research Associate while the company is opening new revenue streams across Business Agents, paid

messaging, subscriptions, APIs and enterprise products. Meta still has considerable runway to improve ranking and recommendations, supporting both Key changes

ad inventory and pricing. 800.00 to TP ↓ -6.2% 750.00

We also see a credible path for compute capacity sales in the near to medium EPS (USD) 33.05 to 31.37 ↓ -5.1%

term. The company is receiving offers at multiples of its compute cost, creating an 255,194.8 to Revenue (USDm) ↓ -0.1% 254,889.3 attractive opportunity to monetize capacity while demand remains constrained. Longer term, Meta sees higher returns from selling intelligence through consumer GAAP EPS 33.05 to 31.37 ↓ -5.1%

and enterprise products. We think this preference for higher-value monetization, Source: Deutsche Bank

combined with strong current demand for raw capacity, increases the likelihood that Meta selectively sells compute while its agent, API and software businesses scale.

Infrastructure investment remains substantial, but the strategy is becoming clearer. The company is maximizing capacity through 2027 while preserving flexibility around server purchases beyond that period. We think Meta could install a greater proportion of internal silicon in the data centers it is now planning for 2028 and beyond, lowering accelerator costs, improving performance per watt and reducing reliance on 3P chips. All in all, we think investors would have preferred a FY27 capex guidance framework to help on expense visibility into the next year. That said we do not discount the possibility that FY27 capex could represent peak intensity given management’s comments around maximizing capacity through 2027 and preserving flexibility from 2028 onwards. We think this could imply that the company could be potentially waiting to see if ROIC scales before committing to greater capacity investments.

Deutsche Bank Securities Inc. IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

While we understand the concerns around the magnitude of the infrastructure build, we contend the negative stock reaction places too much emphasis on near- term spending without fully accounting for the returns already visible across advertising and engagement. Moreover, new AI products, potential compute sales and a greater internal-silicon mix should also expand the return opportunity. All in, we reduce our FY26 revenue / GAAP EPS expectations, but raise Capex estimates modestly and maintain our Buy rating. We do lower our target to $750 (from $800) based on 23x our FY27 GAAP EPS estimate, down from 24x previously to account for lower visibility on FY27 capex levels and lower peer valuation multiples.

Results and…