Meta stock rating maintained by Citizens JMP on AI benefits

Investing.com - Citizens JMP has reiterated its Market Outperform rating for Meta Platforms Inc. (NASDAQ:META) with a price target of $750.00, as the tech giant’s stock trades near its 52-week high of $747.90. According to InvestingPro data, Meta’s current market capitalization stands at $1.76 trillion, reflecting strong investor confidence.

The research firm believes that AI enhances every aspect of Meta’s core advertising business, making content more engaging and creating more ad impressions while improving ad relevance, click-through rates, and conversions. This optimization has contributed to Meta’s impressive 81.77% gross profit margin and 19.37% year-over-year revenue growth, as reported by InvestingPro.

Citizens JMP slightly increased its growth estimates for Meta, noting that more computing power and access to better models can help sustain revenue growth for the social media giant.

Despite expressing some caution regarding Meta’s current investment cycle, the firm maintained its price target based on approximately 26 times the expected 2026 GAAP earnings per share of $28.56.

The analyst justified Meta’s premium price-to-earnings valuation relative to Google (NASDAQ:GOOGL) and the broader market, citing Meta’s "best-in-class advertising platform" that continues to improve with AI, its investments in Facebook Reality Labs and XR/VR, and potential opportunities with Meta AI glasses.

In other recent news, Meta Platforms has appointed Connor Hayes as the head of Threads, a move that underscores the company’s commitment to developing the microblogging service as a standalone product. This change in leadership comes as the app’s growth necessitates dedicated oversight, previously managed by Instagram head Adam Mosseri. In financial updates, KeyBanc has increased its price target for Meta Platforms to $800, maintaining an Overweight rating. The firm anticipates second-quarter revenue of $45.3 billion and third-quarter guidance ranging from $45 billion to $47.5 billion. KeyBanc has also projected 2027 revenue to reach $244 billion, with earnings per share estimated at $32.01, despite potential cost pressures from AI investments.

Meanwhile, Canaccord Genuity has adjusted its price target for Meta to $850, keeping a Buy rating. The firm expects Meta to report a 14% year-over-year increase in ad revenue for the second quarter, supported by AI-driven improvements in content creation and ad recommendation models. Additionally, Scale AI, which recently received a $14.3 billion investment from Meta, is cutting 14% of its workforce. This restructuring aims to streamline operations in response to shifts in market demand and rapid expansion challenges.

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