Meta Platforms stock rating reiterated at Market Outperform by Citizens JMP

Investing.com - Citizens JMP analyst Andrew Boone has reiterated a Market Outperform rating on Meta Platforms Inc. (NASDAQ:META) with a price target of $750.00. The stock, currently trading near its 52-week high of $747.90, has delivered an impressive 44% return over the past year. According to InvestingPro data, Meta maintains robust financials with an exceptional 81.77% gross profit margin.

The firm cited a SemiAnalysis report that examines Meta’s challenges with its Llama AI model. According to the analysis, Meta’s AI shortcomings stem from specific architectural decisions, including the use of chunked attention versus sliding window attention and expert choice routing instead of token choice routing.

Data quality issues were also highlighted as a factor, with the report noting that Meta does not train on YouTube data, alongside concerns about the company’s model evaluation processes.

Despite these challenges, SemiAnalysis expressed optimism about Meta’s potential to close the AI gap as it increases its GPU capacity and continues building a strong AI team.

The report also suggested that changes to R&D tax deductions through the "Big Beautiful Bill" could potentially help fund Meta’s AI initiatives, a factor Citizens JMP indicated it had not previously considered in its analysis.

In other recent news, Meta Platforms has been actively expanding its artificial intelligence team, hiring two researchers from OpenAI to join its new AI organization, Meta Superintelligence Labs. These hires are part of a broader effort by CEO Mark Zuckerberg to bolster the company’s AI capabilities, following earlier challenges in this area. Piper Sandler has reiterated its Overweight rating on Meta Platforms, highlighting anticipated third-quarter revenue of up to $47 billion, which would signify about a 16% year-over-year growth. The firm’s positive outlook is bolstered by Meta’s AI investments, with expectations of increased capital expenditures. Additionally, Citizens JMP maintains a Market Outperform rating for Meta, citing significant growth in Instagram’s global time spent, which increased by 11.9% year-over-year in June. Despite these advancements, internal challenges persist, as evidenced by a critical essay from a departing Meta research scientist who described dysfunction within the company’s generative AI group. This critique has sparked discussion within Meta, even as the company continues to make strategic hires to revamp its AI initiatives. Meanwhile, Meta’s platforms remain affected by wartime censorship in Russia, where services like Facebook and Instagram have been blocked by authorities.

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