Meta just joined Nvidia and Microsoft in elite subset of the ‘Magnificent Seven’

Nvidia has proven itself the backbone of the AI frenzy as the company struggles to keep up with surging demand for its hardware that can power AI models. And Microsoft is seeing AI benefits to its Azure cloud-computing business as well as its software portfolio.

The opportunity for Meta is “perhaps less tangible” than those others, according to Beck, but he sees the potential for the Facebook parent company to unlock $25 billion to $60 billion in incremental revenue from AI and generative AI. That would come through “AI-bolstered engagement and performance gains,” AI-infused messaging chatbots for businesses and AI tools for marketers that let them create campaigns more efficiently.

Beck rates Meta shares at strong buy, and his new $550 target price is up $100 from before.

Wells Fargo’s Ken Gawrelski said Meta’s AI investments showed the company “playing offense,” and he argued they had the potential to expand the stock’s multiple. He rates the stock at overweight with a $536 target price, up from $438 before.

Meta shares were up 17% in premarket trading Friday and easily on track to reach new record levels. The stock was indicating above $460 in premarket action, while its all-time closing high was a $401.02 level set earlier in the week.

Evercore ISI’s Mark Mahaney noted that Meta is fighting the law of large numbers with an outlook that implies an acceleration ahead in the first quarter.

“We think it’s a matter of at least four powerful product cycles all clicking — AI-infused product improvements that are improving engagement/time spent, AI-infused product improvements that are improving advertiser [return on ad spend] on the platform, Reels monetization tailwinds, and Click-to-Message ads ramping,” he wrote.

Meta “ain’t your Father’s FB,” Mahaney added, highlighting as well the company’s $50 billion increase to its stock-buyback authorization and its plans for its first dividend.

Opinion: Meta stuns Wall Street with its first dividend. Amazon and Alphabet could be next.

“We view these as absolutely the right, appropriate steps for META as this stage in its corporate life and with its $65 billion in cash on the balance sheet,” he said. Mahaney rates the stock at outperform and boosted his price target to $550 from $425.

Bernstein’s Mark Shmulik likened the company to Patek Phillipe watches as he cheered the company’s long-term vision that helped silence skeptics worried about core Facebook’s relevance.

“Meta’s family of apps continues to expand (Threads, Quest), while newer AI initiatives show the promise of a durable future,” he wrote, while keeping an outperform rating but boosting his price target to $535, up by $100 from before. “Perhaps just like the famed Patek slogan, ‘you never actually own Meta’s stock, you merely look after it for the next generation.’”