Meta Platforms Inc META gets higher price targets from analysts on the strength of its artificial intelligence initiatives, though with some concerns about higher spending, after reporting second-quarter financial results that beat estimates.
The Meta Platforms Analysts: KeyBanc analyst Justin Patterson reiterated an Overweight rating and raised the price target from $540 to $560.
Needham analyst Laura Martin maintained an Underperform rating and has no price target.
RBC Capital Markets analyst Brad Erickson reiterated an Outperform rating and $570 price target.
BMO Capital Markets analyst Brian Pitz reiterated a Market Perform rating and raised the price target from $450 to $475.
Truist analyst Youssef Squali reiterated a Buy rating and raised the price target from $535 to $570.
Roth MKM analyst Rohit Kulkarni reiterated a Buy rating and raised the price target from $510 to $550.
Stifel analyst Mark Kelley reiterated a Buy rating and raised the price target from $550 to $590.
JMP analyst Andrew Boone reiterated a Market Outperform rating and raised the price target from $525 to $550.
Piper Sandler analyst Thomas Champion reiterated an Overweight rating and raised the price target from $545 to $575.
JPM analyst Doug Anmuth reiterated an Overweight rating and raised the price target from $480 to $610.
Goldman Sachs analyst Eric Sheridan reiterated a Buy rating and raised the price target from $522 to $555.
Bank of America analyst Justin Post reiterated a Buy rating and raised the price target from $550 to $563.
KeyBanc on Meta: The second-quarter earnings report from Meta reinforced the impact of AI on the core businesses, Patterson said.
"As AI creates more efficiencies for merchants around the world, we believe this can drive further share gains and support consistent 10%+ annual advertising revenue growth," Patterson said.
The analyst said AI returns "appear to be meaningful."
"We believe Meta is investing aggressively in AI, which should improve the core business and open up new opportunities over time."
Needham on Meta: Rising capital expenses could threaten return on invested capital, Martin warns in a new investor note.
"We worry that expenses and CapX ests. will rise faster than consensus ests. during 2025, driven by GenAI and Metaverse investments," Martin said.
The analyst said investors should "remain on the sidelines" with several long-term concerns about the valuation of Meta Platforms business and stock.
RBC Captial Markets on Meta: Higher capex was justified with a strong second-quarter revenue and earnings per share beat, Erickson said.
"Meta's various AI applications are aiming to materially expand its utility for both users and the businesses that want to connect with those users," Erickson said.
The analyst said Meta is creating a long-term opportunity and a "veritable moat" for a technology that could eliminate moats.
BMO on Meta: The social media company could benefit from less spending being down by advertisers on TikTok, Pitz said.
"Our ad checks indicate advertisers are already reducing ad spending budgets on TikTok by 15%-30% ahead of potential legislation in Sept.," Pitz said.
The analyst said Meta may have benefitted from TikTok tailwinds in the second quarter and the carryover could continue in upcoming quarters.
"Despite the intensifying competitive landscape, Meta has proven its ability to retain users and grow engagement."
Truist on Meta: Artificial intelligence efforts from Meta stood out in the quarterly results, Squali said in a new investor note.
"AI-driven recommendation & ranking algos are already driving higher ad conversion and pricing," Squali said.
The analyst said improving AI recommendations could be positive for growth in the third quarter and full fiscal year.
"We believe Meta is very well-positioned to drive meaningful growth from its investments into AI across its platform over time, both across Core AI for the ads business and the newer Gen AI."
Squali said Meta could be one of the winners in the AI race from its massive existing scale of users and large advertising platforms.
Roth MKM on Meta: The technology company is outpacing other mega-cap peers on its AI vision, Kulkarni said.
"Meta's AI investments are already providing returns via improved monetization efficiency across all ad surfaces and significant market share gains," Kulkarni said.
The analyst said Meta is posting growth above its peers over the past five quarters.
"Zuck won AI bingo before the game started, and this time the AI excitement was backed up by performance gains and monetization efficiency," Kulkarni said of Meta CEO Mark Zuckerberg.
Stifel on Meta: The second-quarter results and company guidance showed a balance between top-line growth and increased capex, Kelley said.
"It's hard to deny the increase in Capex is material, but we believe Meta's AI initiatives are paying off already (better engagement, advertiser tools driving incremental budgets), with more to come."
JPMorgan on Meta: The company's second-quarter results show the right to spend big on GenAI for growth, Anmuth said.
"Meta is showing early signs of progress across its AI ambitions, including core product enhancements around content & ads, new products such as MetaAI & the Metaverse," Anmuth said.
The analyst said GenAI will require significant investment by Meta.
"We believe Meta's virtual ownership of the social graph, strong competitive moat, and focus on the user experience position it to become an enduring blue-chip company built for the long term."
Anmuth said Meta is "in rarified air" with its combination of scale, growth and profitability.
Goldman Sachs on Meta: The company silenced investor fears of the macroeconomic environment with its second-quarter results, Sheridan said.
The analyst said Meta is well-positioned for multiple long-term growth themes and is showing momentum in key new products.
"Looking for the remainder of the year, we do see the shares as likely being volatile to a mixture of the digital advertising end demand dynamic as well as any further signals about 2025 investment priorities/levels," Sheridan said.
Sheridan said estimates could prove conservative with their model factoring in little revenue contribution from new AI products like MetaAI and AI Studio.
Bank of America on Meta: Second-quarter results and forward guidance could make the case for Meta Platforms being the top consumer Internet AI stock, Post said in a new investor note.
"We see Meta as the top AI play in consumer internet," Post said.
The analyst cites leading infrastructure and LLM capabilities, evidence of core AI leading to higher ad growth, growing app usage from younger users, and new opportunities with Gen-AI as the reasons for this call.
META Price Action: Meta shares are up 7% to $506.07 Thursday versus a 52-week trading range of $274.38 to $542.81.
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