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Meta Recently Joined Nvidia and Microsoft's 'magnificent Seven' Elite Subset

February 2, 2024
minute read

Shares of Meta Platforms Inc. are experiencing a remarkable surge of 20% in Friday's trading, a substantial increase for a company of its size, potentially setting several significant milestones.

Firstly, Meta's shares (META) are poised to establish a new record, currently trading just below $475. This surpasses its previous record finish of $401.02 earlier in the week.

Notably, Meta is also on track to add over $200 billion to its market capitalization on the day, potentially achieving the largest one-day market cap gain in Wall Street history. This would surpass Amazon.com Inc.'s previous record of a $191.3 billion one-day gain in February 2022.

Meta's robust stock surge follows the company's announcement of its first dividend and exceeded expectations in its outlook.

Raymond James analyst Josh Beck suggests that Meta is now part of an elite group, along with Microsoft Corp. and Nvidia Corp., forming the new hot club for tech stocks known as "MnM" in the artificial-intelligence era. While Nvidia has excelled in powering AI models, and Microsoft is benefiting from AI in its Azure cloud-computing and software portfolio, Beck sees Meta's potential in unlocking $25 billion to $60 billion in incremental revenue from AI and generative AI. This could be achieved through AI-enhanced engagement, performance gains, AI-driven messaging chatbots for businesses, and AI tools for marketers, enabling more efficient campaign creation.

Beck rates Meta shares as a strong buy, increasing his target price to $550 from its previous level.

Wells Fargo's Ken Gawrelski views Meta's AI investments as a strategic offensive move, potentially expanding the stock's multiple. He rates the stock as overweight, with a target price of $536, up from $438 before.

In premarket trading, Meta shares were up 17%, indicating a potential new record level above $460, exceeding the previous all-time closing high of $401.02 set earlier in the week.

Evercore ISI's Mark Mahaney points out that Meta's outlook implies an acceleration in the first quarter, driven by several powerful product cycles, including AI-infused improvements in engagement, advertiser return on ad spend, Reels monetization, and the ramping up of Click-to-Message ads.

Mahaney emphasizes that Meta has evolved beyond its initial identity as Facebook, noting the company's $50 billion increase in its stock-buyback authorization and plans for its first dividend. He rates the stock as outperform, increasing his price target to $550 from $425.

Bernstein's Mark Shmulik likens Meta to Patek Philippe watches, praising the company's long-term vision that has dispelled concerns about the relevance of core Facebook. He maintains an outperform rating, elevating his price target to $535, a $100 increase from before, suggesting that owning Meta's stock is akin to looking after it for the next generation.

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Bryan Curtis
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