According to UBS analysts, Meta Platforms’ AI efforts are not getting enough recognition from the market. They believe that consumers’ use of AI on the Facebook-owned platform is being overlooked. The UBS team argues that releasing AI chatbots on Instagram, WhatsApp, and Facebook should increase users’ time spent on the platforms, generating more advertising revenue in turn.
The UBS analysts highlighted an example of Snap’s smaller rival that launched My AI chatbot in April, resulting in over 150 million users sending over 10 billion messages. Meta’s chatbot is estimated to add $7.5 billion in annual revenue for the company if 5% of search queries on the Facebook app are monetized.
UBS analysts led by Lloyd Walmsley raised their target price for Meta stock to $335 from $300 and retained a Buy rating. However, Meta’s stock is down 1% at $285.94 in early trading on Monday. This year, the stock has already doubled, with Wall Street analysts excited about its AI and cost-cutting plans.
The UBS team noted that their projected price-to-earnings multiple of 20 times for Meta’s 2024 earnings was used to justify chasing the stock price up further, since it was below its five-year average of 21 times. They believe that more consumers’ product leveraging GenAI will boost Meta’s revenue in the future.