Investing.com -- Raymond (NS:RYMD) James added Meta Platforms (NASDAQ:META) to its ‘Analyst Current Favorites’ list, a selection of the firm’s favorite stock ideas from the analysts in its Equity Research team.
The investment firm sees Meta Platforms as well-positioned for a stronger narrative around AI and generative AI monetization in 2025.
Advancements in the company's recommendation model (DLRM) are expected to boost user engagement by a mid-single to low-double-digit percentage.
Furthermore, increasing interaction with Meta AI, which already boasts over 500 million monthly active users, could pave the way for a $10 billion-plus opportunity in search and assistant services by 2026, particularly in targeted sectors like travel and entertainment.
Raymond James analysts hold a Street-high estimate for Meta's 2025 capital expenditures, based on a detailed forecast that accounts for investments in DLRM, Meta AI, and Llama.
However, they believe the buyside “is already contemplating a similar level and thus do not view an above-Street capex as a negative catalyst,” analysts said in a note.
Meta stock's valuation remains near a market price-to-earnings (P/E) multiple, analysts highlight, with potential for expansion as the AI and generative AI monetization story gains traction.
They also point out that "further upside potential [could] be unlocked from the potential for Reality Labs losses to peak next year as more mainstream reality use cases like smart glasses and AR gain traction."
Some of the stocks that were already a part of RJ’s ‘Analyst Current Favorites’ list include Roblox Corp (NYSE:RBLX), On Holding AG (NYSE:ONON), GoodRx Holdings Inc (NASDAQ:GDRX), e.l.f. Beauty (NYSE:ELF), and Salesforce (NYSE:CRM), among others.
Last month, Meta reported weaker-than-expected user numbers and warned of a substantial acceleration in its infrastructure expenses next year in its third-quarter earnings report.