JPMorgan has downgraded Meta Platforms to a neutral rating from overweight and slashed its price target to $725, citing concerns over the company's ability to generate returns on its heavy artificial intelligence capital expenditures. The investment bank noted that while Meta reported better-than-expected Q1 revenue growth driven by AI-driven ad stack optimizations, intensifying full-stack AI competition poses a challenging path forward. The downgrade follows Meta's decision to hike its full-year capital expenditure outlook to between $125 billion and $145 billion, up from the previous guidance of $115 billion to $135 billion. Analyst Doug Anmuth expressed that investors are seeking greater clarity on Meta's agentic products and how its Muse models will drive incremental revenue beyond advertising, noting that shares shed over 9% following the announcement. Despite these concerns, JPMorgan acknowledged Meta's recent rollout of the Muse Spark AI model, which drove double-digit percentage increases in Meta AI sessions per user. The analyst highlighted strong capabilities across visual understanding and social content but warned that rivals like Google and Amazon benefit from deeper enterprise tech stack integrations and silicon supply advantages. The article concludes by noting that JPMorgan's bearish stance contrasts with the broader market consensus, as 60 out of 67 analysts covering Meta maintain a buy or strong buy rating. The report underscores the tension between Meta's aggressive AI spending strategy and shareholder concerns regarding its competitive positioning against industry peers.