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Even after a dip in August, Meta Platforms (NASDAQ:META) stock has been a strong performer in 2023 so far.
Don’t assume that the party is over yet, though. Indeed, at least one prominent analyst is bracing for Meta Platforms to potentially deliver even more value to its loyal shareholders.
By now, many financial traders know Meta Platforms is deeply involved with artificial intelligence technology. However, there’s a recent development that might surprise you.
In the coming years, believe it or not, Meta Platforms could actually be the king of the hill in AI systems. The only question is whether you want to own META stock now, or later on, when the share price will probably be closer to $400.
Reels’ Growth Will Drive META Stock Higher
Not long ago, Morgan Stanley analyst Brian Nowak assigned an “overweight” rating to Meta Platforms shares. That’s not unusual, but it’s Nowak’s price target for the stock that might surprise you.
Specifically, the Morgan Stanley analyst published a $375 price target on META stock. This implies a great deal of upside from the current share price.
Nowak expects Meta Platforms’ earnings to increase to $20 per share by 2024. To support this prediction, he cited untapped revenue opportunities from Facebook’s Reels feature (which is similar to TikTok).
That’s an ambitious projection, since Wall Street only expects Meta Platforms to earn $16.85 per share in 2024. I agree with Nowak’s assessment, as the financial community is probably underestimating Reels while it’s over-focusing on TikTok and Elon Musk’s X/Twitter.
Whether Reels-generated revenue will drive META stock to $375 remains to be seen. However, Nowak remains optimistic.
“The fact that Reels engagement is driving incremental time spent on the platform. . . gives more confidence in Reels ability to drive” Meta Platforms’ ad revenue, he explained.
Meta Platforms Goes Toe-to-Toe With ChatGPT
The AI revolution of the 2020s may have started with OpenAI’s ChatGPT generative AI chatbot. However, the next quantum leap may come from Meta Platforms, not OpenAI.
The Wall Street Journal broke the story that Meta Platforms is developing an AI system “to be as capable as OpenAI’s most advanced model.” It will be a large language model (LLM), and Meta Platforms reportedly expects to begin training the new AI system in 2024.
If all goes according to plan, this AI platform will be several times more powerful than Meta Platforms’ already powerful LLM, Llama 2.
Now, don’t get the wrong idea here. OpenAI’s ChatGPT-4 chatbot is certainly robust. Still, I wouldn’t be surprised if Meta Platforms’ rival AI technology seriously threatens OpenAI and all other competitors.
Meta Platforms’ upcoming AI system could help businesses “build services that produce sophisticated text, analysis and other output.”
This truly could be a game-changer for Meta Platforms and for the advancement of AI technology.
META Stock: $375 Could Just Be the Beginning
It’s entirely possible that the market is underestimating Meta Platforms’ moneymaking potential with Reels. In addition, Meta Platforms should become an AI market juggernaut with its in-progress AI/LLM system.
Therefore, I believe that Nowak’s $375 price target for META stock, while not guaranteed, is definitely realistic. So, start a share position or add to an existing stake in Meta Platforms.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the biedexmarkets.com.com Publishing Guidelines.