:max_bytes(150000):strip_icc()/GettyImages-2243570682-01798fc39ed240af93823f99e376c7ed.jpg "Meta Is a Top S&P Gainer Today. Here’s Why The Social-Media Stock Is Surging.")
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Key Takeaways
- Meta Platforms beat Wall Street estimates across metrics, showing how its AI efforts are paying off; it also guided some first quarter metrics above consensus expectations.
- The news fired up investors, with the Magnificent Seven stock trading at 2026 highs.
Meta Platforms is the only company in the Magnificent 7 living up to the name today.
Shares of the social media giant were recently up more than 9% on Thursday, and at year-to-date highs, after last night’s fourth-quarter earnings report last beat Wall Street estimates across metrics, suggesting that its efforts in artificial intelligence are paying off.
Investors rewarded Meta (META) for the news: Its stock is among the top gainers in the S&P 500, and it’s the only member of the group of seven big U.S. tech stocks climbing. The rest—Nvidia (NVDA), Alphabet (GOOGL), Microsoft (MSFT), Amazon.com (AMZN) and Tesla (TSLA)—were mostly sliding, while Apple (AAPL) was clinging to small gains.
WHY THIS MATTERS TO THE AI-TRADE
Meta’s latest earnings report is helping revive some of the lost optimism around the AI trade—showing that the billions spent to develop those capabilties can bear fruit in the near future.
Upbeat sentiment around Meta is pushing analysts to produce glowing reports and raise their price targets, distributing optimistic perspectives on its efforts to raise engagement and improve monetization with the help of machine-learning. All 24 analysts tracked by Visible Alpha have a buy rating on the stock; their mean price target, $868, implies upside of 20% from recent prices.
“We have a balance of new things that we’re trying to do, while also investing very heavily in making sure that all of the work that we’re doing in AI improves both the quality and business performance of the core apps and businesses that we run there,” said CEO Mark Zuckerberg on Wednesday, per a conference-call transcript provided by AlphaSense.
Meta’s fourth quarter earnings per share of $8.88, beat Visible Alpha estimates of $8.24. Revenue for the quarter hit $59.9 billion, above estimates for $58.4 billion. The company’s revenue guidance for the quarter started in January, of $53.5 billion to $56.5 billion, also beat Street expectations. It plans to roll out a number of new AI models and products this year.
“Meta has the potential to monetize its AI assistant, Meta AI across several use cases, including AI agents for businesses, deeper automation of advertiser tools & creative, and ongoing integration of genAI capabilities into Meta hardware products,” Wedbush’s team, including Scott Devitt and Dan Ives, wrote in a report Thursday. They raised their price target on the stock to $900 from $880 previously.
Meta’s AI capabilities and planned rollouts is eliciting optimism from analysts as they extrapolate future growth potential from the recent quarter. Meta AI, its multilingual virtual assistant integrated across the Facebook, Instagram, and WhatsApp as well as its Ray-Ban glasses, reached over one1 billion monthly active users.
Morgan Stanley analysts led by Brian Nowak said Meta’s engagement and monetization improvements in the fourth quarter, as well as its plans to continue raising the bar, gives them “confidence” that its revenue growth will accelerate going forward. They raised their price target on the stock to $825 from $750. Jefferies analysts raised their price target by $90 to $1000.
The company’s capital expenditure guide for this year—$162 billion to $169 billion—exceeded Street estimates of around $151 billion, likely raising some eyebrows. But based on investors’ reaction today, Meta’s work is getting the green light.
