Meta Platforms (NASDAQ: META), the parent company of Facebook and Instagram, is reaping the rewards of incorporating artificial intelligence into its products, as reflected in its Q3 results.
The impact of AI guided a Citi (NYSE: C) analyst to raise the company’s share price target in an investor note on October 31.
In particular, Ronald Josey revised META’s stock price target to $705, up from $645, maintaining a ‘Buy’ rating. This increase was driven by Meta’s robust advertising revenue, which surged 20% year-over-year.
Picks for you
Josey emphasized the impact of Meta’s AI recommendation engine in boosting engagement on Instagram and Facebook, enhancing advertisers’ return on investment.
“One of our biggest takeaways from the quarter was engagement gains at both IG and FB from Meta’s AI recommendation engine, highlighting the ROI from its AI investments, and we believe it remains early days here.<…> Reiterate Buy rating and raise TP to $705,” the analyst said.
While Josey noted that Meta’s capital expenditures will likely rise in 2025, he stressed the significance of the company’s ongoing “Year of Efficiency,” which suggests further potential for operational improvements in the near, medium, and long term.
As a reminder, CEO Mark Zuckerberg’s “Year of Efficiency” initiative focuses on cutting costs and improving speed by reducing management layers and eliminating low-priority projects. At the same time, the approach aims to promote growth in capital expenditures in 2025 as Meta further invests in AI.
Meta’s impressive Q3 revenue
For the quarter ending September 2024, Meta reported $40.58 billion in revenue, reflecting a 19% year-over-year increase, while profits surged 35% to $15.69 billion.
To this end, Zuckerberg acknowledged that the company had a good quarter and emphasized the significance of AI.
“We had a good quarter driven by AI progress across our apps and business. <…> We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses,” Zuckerberg said.
Indeed, Citi’s target of above $700 opens the door to hitting $800, which is now within reach based on historical performance. The stock has shown positive momentum since the company’s rebranding.
Other analysts support Meta’s bullish outlook and consider it to have a competitive edge in its core social media business. Bernstein analyst Mark Shmulik believes Meta stock presents a compelling case for long-term investors.
“The long-term story is as strong as ever. As we look ahead we’re constructive on the core business with an expected launch of ads on Threads, continued Reels ramp, more AI/ Advantage+ ad tools offer investors top-line upside with a potential TikTok ban not currently priced in,” Shmulik said.
What next for META share price
Looking at META stock performance, the technology giant’s value dropped despite the earnings beat. At the close of the October 30 trading session, the stock traded at $591.80, down 0.25% for the day.
This trend continued in pre-market trading on October 31, with the social media giant down over 2%.
Regarding upcoming price targets, a stock market analyst who goes by the pseudonym MarketRebellion noted in an X post on October 30 that technically, META is showing strength, with strong support above its 50-day and 200-day moving averages.
The trading expert set a near-term price target range of $600 to $650, with a potential breakout pushing the stock toward the upper limit.
In conclusion, Meta’s Q3 performance and continued investment in AI will remain central to the company’s future. However, some headwinds remain regarding how the company will deal with competition and the impact of the upcoming United States elections.
