Meta Platforms shares moved higher in early Monday trading after a top Wall Street analyst boosted his price target on the stock amid the Facebook and Instagram parent’s AI-investment drive.
Meta (META) shares, which hit a record high earlier in the session, have been one of the standout performers of the so-called Magnificent 7 stocks this year, adding around $510 billion in market value.
The stock has also risen nearly 20% since the company’s second-quarter earnings update in late July, when it posted a 22% surge in overall revenue and forecast September-quarter sales in the region of $38.5 billion to $41 billion.
That growth rate helped cushion the impact of its capital-spending plans, most of it tied to AI investments, which is likely to rise to between $37 billion and $40 billion for the whole of 2024.
Meta’s AI investments are having a big impact on Instagram, where engagement time and ad impressions are showing impressive growth.
Ad revenue across its family of apps division, including Facebook, Instagram and WhatsApp, rose 22% to $38.3 billion, with ad impressions up 10% from the same period last year. The group also launched a full-screen video player and a unified video recommendation system designed to further boost engagement times and expand ad inventories.
Meta’s AI-investment return
Citigroup analyst Ronald Josey, who added $65 to his Meta price target, taking it to $645, in a note published Monday, says the investments, as well as the broader strength in the global ad market, will support the group over the final months of the year and beyond.
Related: Analysts adjust Meta stock price target after earnings
The analyst cited an increased ad load and overall usage rate for its Reels short-form-video offering, which Meta finance chief Susan Li said would “continue to drive growth” for Instagram.
“Meta’s discovery engine and content recommendation models, powered in part by its investments in generative artificial intelligence, provide a competitive advantage and represent a clear path for large language models’ return on investment,” said Josey.
“We believe Meta’s competitive advantage is now ‘deeper and wider’ due to improved engagement, investments in generative AI, and multiple newer offerings,” adding that Meta is the investment bank’s “top pick across the internet sector.”
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Meta is slated to post its third quarter earnings update on October 23, with early indications suggesting a bottom line of $5.21 per share on revenues of $39.33 billion.
Meta shares were marked 0.4% higher in early afternoon trading to change hands at $563.46, move that would extend the stock’s 2024 gain to around 62.7% with a market value of $1.43 trillion.
The stock hit an all-time high of $573.98 each earlier in the session.
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