Meta Is An 'AI Story' Fueled By Llama And Meta AI, Says Bullish Analyst

Meta Platforms, Inc. META reported its third-quarter results after Wednesday's closing bell, beating analysts' expectations on the top and bottom lines while indicating higher capital spend to come. Analyst reactions are pouring in. 

The Meta Analysts:

• Bank of America Securities analyst Justin Post maintained Meta Platforms with a Buy and raised the price target from $630 to $660.
• Rosenblatt analyst Barton Crockett maintained a Buy rating and $811 price target.
• Goldman Sachs analyst Eric Sheridan maintained a Buy rating, but lowered the price target from $636 to $630. 
• Needham analyst Laura Martin reiterated an Underperform rating on Meta.

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The Meta Takeaways

Bank of America: BofA Securities labeled Meta an "AI Story" and pointed to the rapid and growing adoption of Llama and Meta AI. The firm also raised ad revenue estimates on product traction and anticipates Meta’s Al-driven ad improvements to play out in 2025. 

Rosenblatt: Rosenblatt pointed to Meta's pivot from "a year of efficiency in 2023, to a year of ROI on bigger spending in 2025," but noted that early evidence suggests the return on investment could be high. The firm said Meta's AI investments drove the 20% revenue growth and, if sustained, could continue to support growth in spite of increasing capital investment. 

Goldman Sachs: Goldman Sachs analysts highlighted Meta's advertising performance in the quarter and revenue guidance suggesting growth into the fourth quarter. The research firm echoed sentiments of AI usage driving user growth, but expressed concerns about additional Reality Labs operating losses. 

Needham: Needham analysts reiterated an Underperform rating on Meta and pointed to the company's guidance for increased capital expenditures related to AI development as one of the reasons. Needham highlighted Reality Labs continued losses and ongoing spending on Metaverse. 

"Why buy META now, when management is saying that they are in a two to three year investment cycle," the analyst wrote. 

Price Action: According to Benzinga Pro, Meta Platforms shares are down 3.38% at $571.66 at the time of publication Thursday.

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