Meta Platforms Inc (NASDAQ:FB) has an opportunity to expand its total addressable market with artificial intelligence, according to analysts at Oppenheimer.
The firm reiterated its Outperform rating and raised its price target to $350 from $285. Meta shares traded down 0.2% Monday afternoon at $272.11.
“We believe META is well positioned to drive higher pricing and engagement from AI investments,” analysts wrote in a note to clients over the weekend. “We believe such investments have been the major reason for META's outperformance vs. the digital ad market in 1Q23, and should support outperformance through 2024.”
AI products have been a key driver of recent revenue overperformance, the analysts argued.
“META has AI-powered Advantage+ ads and has launched other ad tools through AI Sandbox, which alters text, images, and backgrounds,” analysts wrote. First-quarter 2023 also marked the first quarter since 2Q21 that META ad revenue outpaced peers.”
Looking ahead, Meta plans to incorporate AI into its click-to-message ads, along with its service chatbots, which the analysts note would enable small- and medium-sized businesses to automate customer service chat.
Oppenheimer is also more bullish on Meta’s digital ad share.
Estimates imply META will gain 56bps/60bps of digital ad share in '23/'24, before losing 52bps in '25 from lack of retail media/CTV exposure,”analysts wrote. “However, our forecasts imply META will gain 323bps of digital media ex-[connected TV]/retail media share through ’25. We see upside to '25E based on the ability to use AI to execute on new products targeting ecommerce and customer support.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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