Meta stock poised for gains as AI leadership strengthens with Llama move – Wolfe Research

On Wednesday, Wolfe Research maintained its positive stance on Meta Platforms Inc. (NASDAQ:) stock, reiterating an Outperform rating with a price target of $630.00. The firm’s outlook is buoyed by Meta’s strategic decision to open source its artificial intelligence model, Llama. According to the firm, this move is not fully appreciated by the investment community.

The firm asserts that Meta’s initiative to make Llama publicly accessible is a significant step that positions the company as a leader in the artificial intelligence sector. This openness is expected to draw top-tier talent to the company, which is crucial for ongoing innovation. By attracting skilled individuals, Meta is poised to enhance its platform’s capabilities further.

Moreover, the firm suggests that Meta’s decision to open source Llama could lead to the development of new streams of revenue. This strategic move is seen as a way for Meta to diversify its income sources, which is particularly important for the company’s sustained growth and market presence.

Wolfe Research also believes that Meta’s latest action is a forward-thinking approach that will contribute to the company’s long-term viability. By sharing Llama with the wider community, Meta is not only showcasing its commitment to innovation but also securing its position in the rapidly evolving AI landscape.

In summary, Wolfe Research’s continued Outperform rating and $630.00 price target for Meta Platforms reflect the firm’s confidence in the company’s strategic direction, particularly its decision to make Llama open source. This move is anticipated to enhance Meta’s reputation as an AI pioneer, attract skilled professionals, foster innovation, create new revenue opportunities, and support the company’s enduring success.

In other recent news, Meta Platforms CEO, Mark Zuckerberg, disclosed that the Biden administration pressured the company to censor specific COVID-19 content during the pandemic. This information was revealed in a letter to the U.S. House Judiciary Committee, where Zuckerberg expressed regret for not resisting this pressure more strongly.

In other developments, tech firms including Meta have requested the Malaysian government to halt its plan requiring social media platforms to obtain a license, citing potential suppression of innovation.

Furthermore, Meta and Spotify (NYSE:) chiefs have criticized the European Union’s regulations for open-source artificial intelligence (AI), arguing that these rules hinder innovation and could cause Europe to lag in the AI sector. The chief executives called for clearer policies and more consistent enforcement.

In a different context, justice ministers from Sweden and Denmark are holding tech companies accountable for advertisements used by gangs to recruit individuals for criminal activities.

Investors are also tracking shifts in tech stocks as revealed in recent fund filings. Notably, Soros Capital Management made significant changes to its portfolio, including selling off its stake in Microsoft (NASDAQ:) and reducing investments in other major tech firms, including Meta. Meanwhile, the Saudi Public Investment Fund showed a bullish stance by adding call positions in PayPal (NASDAQ:), Microsoft, and Meta Platforms Inc. These are among the latest developments in the tech sector.

InvestingPro Insights

Wolfe Research’s optimistic outlook on Meta Platforms Inc. (NASDAQ:META) is further substantiated by key financial metrics and insights from InvestingPro. Meta’s commitment to innovation and strategic initiatives is echoed in their financial health and market performance. With a robust Piotroski Score of 9, Meta demonstrates strong financial stability, which is an attractive indicator for investors. Additionally, the company’s impressive gross profit margins, which stand at a substantial 81.49% for the last twelve months as of Q2 2024, illustrate its efficiency in generating earnings relative to its revenue.

Meta’s financial prudence is also evident as the company holds more cash than debt on its balance sheet, providing it with a solid foundation to navigate market fluctuations and invest in growth opportunities like AI advancements. This aspect, coupled with the fact that Meta is trading at a low P/E ratio relative to near-term earnings growth—24.35 for the last twelve months as of Q2 2024—suggests that the stock may be undervalued considering its future earnings potential.

For readers seeking more in-depth analysis, there are over 15 additional InvestingPro Tips available, which provide a comprehensive look at Meta’s financial and market position (https://www.investing.com/pro/META). These tips offer insights that could be valuable for investors considering Meta’s stock, especially in light of Wolfe Research’s positive stance and the company’s strategic moves in the AI sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.