Meta Platforms is preparing to announce its fourth-quarter earnings post-market on Wednesday, with analysts expressing confidence in the company’s ability to capitalize on a promising 2024. The majority of analysts tracked by Visible Alpha maintain a “buy” or equivalent rating for Meta’s stock, underscoring a positive sentiment regarding the tech giant’s future.
The optimism is bolstered by CEO Mark Zuckerberg’s recent announcement of plans to significantly increase capital expenditures for the year, allocating between $60 billion to $65 billion primarily to bolster the company’s AI initiatives. This figure marks a substantial rise from the previous estimate of $38 billion to $40 billion for 2024, indicating Meta’s robust commitment to expanding its technological capabilities.
Recent insights from Bank of America highlight a staggering performance for Meta’s stock, which surged nearly 66% over the past year, propelled by revenue growth, effective cost management, and a favorable outlook on AI capabilities. The firm upheld a “buy” rating and enhanced its price target for Meta’s stock from $660 to $710, reflecting anticipated continuing contributions from AI to advertising revenue and a rise in messaging earnings.
For the upcoming earnings report, Wall Street forecasts a revenue increase of 17% year-over-year, estimating Meta’s fourth-quarter revenue at approximately $47.04 billion. Additionally, earnings are expected to climb to $17.6 billion—or $6.78 per share—compared to $14.02 billion or $5.33 per share from the previous year, even amid ramped-up investment in AI.
Furthermore, the increasing focus on AI spending comes alongside competitive pressures, as evidenced by comments from analysts regarding a Chinese AI startup, DeepSeek, which has introduced models that challenge existing American technologies at considerably lower costs. Despite this unsettling news for some in the industry, Meta’s stock has maintained its upward trajectory. Analysts from Morgan Stanley suggested that the advancements made by DeepSeek could potentially benefit Meta by enhancing its own AI models.
Moreover, the short-lived TikTok ban in the U.S. earlier this month might serve as an unexpected boon for Meta, particularly for its Instagram Reels platform, as some TikTok users appear to have shifted their attention to Reels according to feedback from teens.
In summary, Meta Platforms is poised to report promising fourth-quarter earnings driven by substantial investments in AI and a strong performance in its stock. With a consensus among analysts projecting continued growth, the company seems well-positioned to navigate the evolving tech landscape with optimism and strategic foresight.