Meta Platforms could be the best name to benefit from AI applications - Barclays

By Sam Boughedda

Barclays analysts raised the firm's price target on Meta Platforms (NASDAQ:META) to $270 from $260 per share on Friday, telling investors in a note that the tech giant remains the firm's preferred name among mega-cap tech, and it could be "the best name in consumer internet to benefit from the coming wave of Generative AI applications."

"Shares have re-rated significantly in the past few months, and while we think the alpha vs. GOOG and AMZN may have been realized on recent cost cuts, the bull case around how generative AI could unlock value has not," wrote the analysts, who maintained an Overweight rating on the stock.

They believe the "big unlock" in AI is likely to be the explosion of content such as video, images, audio, etc., comparable to what happened in the early years of YouTube or Netflix, where the inundation of content led to a massive uptick in usage and engagement.

"In contrast to the investments in VR/AR, which attempt to bring the user into a completely new environment, we think Generative AI fits the core business much better on mobile and desktop and could end up being META's elusive 'second act' while those longer-dated technologies around the metaverse shift back to the third act," they added.

The analysts also believe AI solves the engagement problems that META has suffered from in some of its social media apps historically while also helping its ad business.