Why an analyst sees Meta shares getting back to record highs – plus, another tariff reprieve
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Markets: The S&P 500 is on track for a fourth day of gains on Tuesday as AI-related names gain strength. AI chip makers and Club holdings Nvidia and Broadcom were up around 2.5% and 2%, respectively, in afternoon trading. Meanwhile, hopes that the Fed will cut interest rates in January have diminished further following stronger-than-expected economic data. The first third-quarter GDP report, delayed by the government shutdown, showed the U.S. economy grew 4.3% in the three months ending in September, beating Dow Jones’ forecast for 3.2% growth. China ceasefire: The Trump administration has chosen to delay imposing additional tariffs on Chinese chips for at least 18 months, according to a Federal Register filing Tuesday. The decision comes after the administration concluded a trade investigation launched under former President Joe Biden. The investigation determined that China “is increasingly using aggressive and comprehensive non-market policies and practices to pursue dominance” in the semiconductor industry that “disadvantages U.S. companies, workers, and the economy.” Despite that finding, the Trump administration said it is imposing “an initial tariff level of 0 percent” on Chinese-made silicon through at least June 23, 2027. This move should help keep US-China trade tensions at bay, which is a positive development for the overall economy and therefore the stock market as we head into 2026. While this move is about Chinese chips coming to the US rather than US restrictions on cutting-edge chips going to China, the encouraging takeaway for investors is what it says about White. House’s stance on China. It is also expected to help with the input costs of companies producing products containing Chinese chips in sectors such as defense, medical devices and automotive. Buy the dip: Baird says the weakness in Meta Platforms shares is a great opportunity for investors. After closing at a record high of $790 per capita on Aug. 12, shares fell through the end of October and then fell in response to third-quarter earnings as investors worried about the level of AI spending. Even though Meta shares bottomed out a few weeks later and have made a nice move since then, the stock is still more than 11% below its pre-earnings decline. Year-to-date, the Meta is up around 13.5%, trailing the S&P 500’s rise of more than 17% in the same period. In a note on Tuesday, Baird analysts encouraged clients to be “opportunistic buyers” on the decline as expectations appear to be better balanced than at the beginning of this year, although short-term risks to investor sentiment still exist. Baird cited catalysts like Meta AI and better implementation in Llama, the company’s large family of language models. The firm added: “Mixed sentiments may continue into early 2026 due to margin uncertainty, but we believe the story could change more constructively throughout the year through a possible margin clearing event, launch of the next Llama model, Meta AI updates, increased monetization from WhatsApp and Threads, etc.” Although analysts favor Meta, they lowered their price targets slightly from $820 to $815 per piece. Still, the updated price target represents a 23% upside from Monday’s close and would be a new all-time high. Like Baird, we’re optimistic about Meta’s AI ambitions, which is why we stepped in during the pullback to buy more Meta shares for the first time in three years. Facebook’s parent company scooped up top AI talent and staffed TBD Labs, which oversees the company’s large language models, with top-notch engineers. Meta is also reportedly planning cuts to its metaverse; This will give the company more flexibility to put capital into faster-growing areas such as generative AI. The club has an $825 price target on the stock. Next up: No big earnings reports tonight. In terms of economic data, initial unemployment claims will be released at 8:30 a.m. ET on Wednesday. The New York Stock Exchange will close at 1pm ET on Christmas Eve and will be closed completely on Christmas Day, Thursday. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
