Raymond James reiterated its "Strong Buy" rating for Meta Platforms Inc. (META, Financial), while Deutsche Bank maintained its $675 price target this Monday. The sentiment reflects Meta's ongoing efforts to integrate AI and GenAI into its services, with revenue growth anticipated by 2025.
Meta's growth drivers include its AI-based recommendation model, which is projected to boost user engagement by mid-single to low-double-digit percentages. Additionally, Meta AI Assistant, boasting over 500 million monthly active users (MAUs), is expected to push the search and assistant market beyond $10 billion by 2026, particularly in sectors like travel and entertainment.
Meta's 2025 capital expenditure forecast remains high, with Raymond James endorsing the company's investments in initiatives such as DLRM, Meta AI, and Llama projects. According to the firm, market expectations have already factored in this elevated capex, reducing its potential to adversely affect the stock.
Currently, Meta's stock is trading about five points below its market price-to-earnings (P/E) ratio, with analysts forecasting a multiple expansion driven by AI and GenAI monetization.
Moreover, further growth is anticipated from the Reality Labs segment. Analysts predict that losses in this segment will peak next year as augmented reality technologies, such as smart glasses, see broader adoption.
Despite concerns over high valuation, Raymond James is confident that Meta's strategic focus and technological advancements will unlock sustainable long-term growth and position it as a leader in AI monetization.
