Why an analyst sees Meta shares getting back to record highs – plus, another tariff reprieve
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: The S & P 500 is on track for its fourth day of gains Tuesday, buoyed by strength in AI-related names. AI chipmakers and Club holdings Nvidia and Broadcom are up around 2.5% and 2%, respectively, in afternoon trading. Meanwhile, hopes that the Federal Reserve will lower interest rates in January further dimmed after stronger-than-expected economic data . The initial third-quarter GDP report, which was delayed due to the government shutdown, showed that the U.S. economy grew 4.3% in three months ended in September, beating the Dow Jones estimate of a 3.2% expansion. China truce: The Trump administration has opted to delay implementing additional tariffs on Chinese chips for at least 18 months, according to a Federal Register filing on Tuesday. The decision came after the administration concluded a trade investigation started under former President Joe Biden. The investigation determined China has “employed increasingly aggressive and sweeping non-market policies and practices in pursuing dominance” in the semiconductor industry, which has “disadvantaged U.S. companies, workers and the economy.” Despite that finding, the Trump administration said it implemented “an initial tariff level of 0 percent” on Chinese-made silicon until at least June 23, 2027. The move should help to keep trade U.S.-China tensions at bay, a positive for the broader economy and, in turn, the stock market as we head into 2026. While this move is about Chinese chips coming into the U.S., rather than U.S. restrictions on cutting edge chips going to China, the encouraging takeaway for investors is what it says about the White House’s posture toward China. Additionally, it should help with input costs for those companies that make products with Chinese chips in them in industries such as defense, medical devices and automotive. Buy the dip: Baird says weakness in Meta Platforms stock is a great opportunity for investors. After closing at a record $790 apiece on Aug. 12, shares drifted lower until late October — and then tanked in response to third-quarter earnings as investors fretted about its level of AI spending. While Meta shares bottomed a couple weeks later and have made a nice move since then, the stock is still more than 11% below its pre-earnings plunge. Year to date, Meta is up around 13.5%, trailing the S & P 500’s more than 17% advance in the same stretch. In the Tuesday note, Baird analysts encouraged clients to be “opportunistic buyers” on the dip because while there are still near-term risks to investor sentiment, expectations seem to be in a better balance compared to earlier this year. Baird cited catalysts such as better execution in Meta AI and Llama, the company’s family of large language models. The firm added, “While mixed sentiment could persist into early 2026 amid margin uncertainty, we believe the narrative can shift more constructively through the year through a possible margin-clearing event; launch of next Llama model; updates to Meta AI; ramping WhatsApp and Threads monetization, etc.” Although analysts are sticking with Meta, they did slightly lower their price target to $815 from $820 apiece. 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 on Meta’s AI ambitions — and that’s why we stepped in to buy more Meta shares for the first time in three years last month during its pullback. The Facebook parent has poached top AI talent , giving the company’s TBD Labs, which oversees its large language models, an entire roster of world-class engineers. Meta also reportedly plans to make cuts to its metaverse unit, which should give the company more flexibility to put capital into faster-growing areas such as generative AI. The Club has a price target of $825 on the stock. Up next: There are no big earnings reports this evening. On the economic date front, initial jobless claims are out Wednesday at 8:30 a.m. ET. The New York Stock Exchange will close at 1 p.m. ET for Christmas Eve, and will be closed entirely on Christmas Day on Thursday. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber 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 trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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