Meta Platforms seeing early positive signs from AI-driven investments

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Meta Platforms seeing early positive signs from AI-driven investments - Morgan Stanley

Published Jan 18, 2023 03:54PM ET

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By Sam Boughedda

Meta Platforms Inc's (NASDAQ:META) price target was raised to $130 from $100 per share by Morgan Stanley analysts in a note Wednesday.

In the wide-ranging research piece, they told investors the rising importance of AI investment and potential near and long-term impacts on engagement and monetization should further favor larger platforms, including Meta.

"META is spending significantly to build out its AI infrastructure/datacenter foot print. On the positive side, META is seeing some early positive signal from these new AI-driven investments (improved matching on Reels and higher watch time, improved ad offerings, etc) but its very early," wrote the analysts.

In addition, the firm sees the investments as a "signal of higher required structural capital intensity going forward," with Meta adjusting to the post IDFA social media landscape that is "more driven by short-form video than social content/signal."

"Material revenue and engagement incrementality from these investments is likely to take time (well into' 23?), and in meantime, we see earnings power staying depressed," the analysts added.

Meta shares have declined 1% Wednesday.

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