Meta's Stock Retains "Highly Attractive" Status Despite 125% Yearly Surge

Meta Platforms Inc., a leader in the field of artificial intelligence, has already demonstrated its ability to translate AI into tangible revenue benefits, and one analyst predicts that this trend will continue to drive the company's stock even higher. Unlike many other companies that merely discuss the potential of capitalizing on AI, Meta has achieved real results through initiatives such as AI-driven recommendations and AI-powered tools for advertisers. These efforts have led to a significant "revenue outperformance" compared to its peers, as noted by Oppenheimer's Jason Helfstein. In fact, Helfstein expects Meta to continue outperforming the market through 2024.

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Reflecting his optimism, Helfstein has raised his price target on Meta's stock to $350 from $285 in a recent note to clients. This new target implies a 27% upside from current levels. Despite the fact that Meta shares have already surged approximately 125% this year, Helfstein maintains an outperform rating on them, considering them "highly attractive." He points out that Meta shares are trading at a roughly 30% discount to the Nasdaq based on 2024 price-to-earnings estimates, which further supports their appeal.

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However, Helfstein acknowledges that the market's discounting may be indicative of concerns surrounding Meta's ability to meet revenue expectations for this year and the next, or a skepticism regarding its long-term growth prospects.

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In response to these concerns, Helfstein asserts that AI is the solution. He highlights Meta's ongoing efforts to incorporate AI into click-to-message ads and chatbots, which would enable smaller businesses to automate customer-service chats. As Meta expands into e-commerce marketplaces and provides customer support for small- and medium-sized businesses (SMBs), it could tap into a market valued at $1.2 trillion.

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Helfstein further expresses his positive outlook for Meta's future AI initiatives, including the development of synthetic video ads for SMBs using AI technology, customized on a per-user basis to enhance return on investment (ROI).

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Currently, Meta shares are up approximately 1% in Monday morning trading, with the potential to achieve a market capitalization exceeding $700 billion for the first time since February 2, 2022, according to Dow Jones Market Data.

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