Analysts believe that Meta, previously known as Facebook, has emerged as a major player in the artificial intelligence (AI) space, alongside tech giants Microsoft and Nvidia. While Nvidia is known for its hardware capabilities that power AI models, Microsoft has been leveraging AI to enhance its cloud-computing business and software portfolio.
According to Raymond James analyst Josh Beck, while the potential for Meta may be less tangible, he sees the company unlocking between $25 billion and $60 billion in incremental revenue through AI and generative AI. This would be achieved by bolstering engagement and performance, deploying AI chatbots for businesses, and providing AI tools for marketers to optimize campaign creation processes.
Beck has given Meta shares a strong buy rating, increasing his target price to $550, up by $100 from before. Similarly, Ken Gawrelski from Wells Fargo views Meta's AI investments as offensive moves that have the potential to expand the stock's multiple. He rates the stock as overweight, with a revised target price of $536.
In premarket trading on Friday, Meta shares surged by 17%, pointing towards a new record high. With premarket trading indicating a value above $460, surpassing the previous all-time closing high of $401.02 set earlier in the week seems inevitable.
Meta Surprises Wall Street with First Dividend
Meta, formerly known as Facebook, is making waves on Wall Street with its recent announcement of a first-ever dividend. This unexpected move has caught the attention of industry experts, leading many to wonder if other tech giants like Amazon and Alphabet will follow suit.
According to Mark Mahaney of Evercore ISI, Meta is defying the law of large numbers by anticipating an acceleration in the first quarter. Mahaney points to four key factors driving this positive outlook: AI-infused product enhancements that boost user engagement, AI-infused product enhancements that improve advertiser return on ad spend, monetization tailwinds from Reels, and the growing popularity of Click-to-Message ads.
Mark Shmulik from Bernstein draws an intriguing parallel, comparing Meta to Patek Philippe watches. Shmulik applauds Meta's long-term vision, which has silenced skeptics concerned about the relevance of its core Facebook platform. He points out that Meta's family of apps continues to expand with offerings like Threads and Quest, while its innovative AI initiatives indicate a promising future. Shmulik maintains an outperform rating on the stock and increases his price target to $535, up by $100 from before. Drawing inspiration from Patek Philippe's famous slogan, he suggests that owning Meta's stock is a responsibility passed down through generations.
Overall, Meta's surprise announcement of its first dividend has stunned Wall Street and sparked speculation about similar moves from other tech giants. With its continued innovation and forward-thinking strategies, Meta appears to be on a path of sustained success.
Key Takeaways:
- Meta defies expectations with announcement of first dividend
- Analysts predict an acceleration in the first quarter due to multiple product cycles
- Meta's stock-buyback increase and dividend plans seen as appropriate for the company's stage and cash position
- Meta compared to Patek Philippe watches, emphasizing long-term vision and expanding app portfolio
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