Investing.com -- Wall Street's skepticism regarding Meta Platforms Inc's (NASDAQ: META) massive artificial intelligence spending may be overlooking the company's expanding competitive moats, according to Morgan Stanley analyst Brian Nowak. In a recent research note, Nowak reiterated Meta's "top pick" status and maintained a $775 price target, representing roughly 30% upside from current levels.

Investor sentiment has lagged behind other megacap technology peers due to limited visibility into the returns on Meta’s projected $380 billion capital expenditure plan for 2027 and 2028. However, Nowak argued that four nascent product offerings could each add $1 to $3 to the company's 2028 earnings per share while successfully driving multiple expansion.

The first major catalyst centers on a multi-billion dollar search opportunity integrated within Meta AI. Nowak estimated that if the tool retains 1 billion users and monetizes just 10% of daily queries, it could easily generate over $10 billion in annual revenue.

Simultaneously, Meta is leaning into high-margin revenue streams by rolling out tiered subscription packages for its 3.5 billion daily active users. Even modest adoption among its 50 million content creators and millions of advertisers could bring in $7 billion in incremental revenue, adding $2 to earnings per share, according to Nowak.

Beyond new consumer products, Meta’s core advertising engine continues to benefit from a significant, GPU-enabled machine learning overhaul. The analyst emphasized that every 1% upside to modeled 2028 ad revenues would inject $3.5 billion into the business and boost earnings per share by 2.5%.

Finally, Nowak highlighted a "Neocloud safety net" that gives Meta the valuable flexibility to lease out any unutilized compute capacity to external enterprise clients. If Meta leases out just one gigawatt of its massive capacity at standard market rates, it could cushion free cash flow and provide a minimum 8% upside to 2028 earnings.

Despite the positive long-term outlook from Morgan Stanley, near-term capital anxieties continue to weigh heavily on the tech giant's equity value. Meta stock is down 15% over the past year, drastically underperforming the S&P 500's robust 23% gain during the same period.

The underlying tension exploded into view on Friday when the company's stock dropped 5.5% during normal trading hours. The sudden selloff was triggered by a Financial Times report revealing that the Facebook parent is considering a major equity raise to fund its AI infrastructure buildout.

According to the report, Meta is actively exploring the possibility of selling tens of billions of dollars in new stock to finance its massive AI ambitions. At its current valuation, the tech giant trades at a 30% discount to Alphabet Inc.’s Google on consensus earnings estimates, sitting nearly two standard deviations below its historical average.