Raymond James maintained his bullish stance on META with a strong buy rating in a note on Wednesday, calling it a leader in generative artificial intelligence (GenAI) and raising its stock target to $550 from $525 per share.
Their note highlighted Meta’s (NASDAQ:) “leadership within GenAI’s fundamental building blocks,” citing factors such as its extensive computing infrastructure, large user base for training AI models, and top-tier talent pool.
Raymond James believes the market is underestimating Meta’s GenAI capabilities. They point to Meta’s advantages in areas such as computing infrastructure, distribution scale and talent acquisition.
According to Raymond James’ calculations, Meta’s AI models rank highly, demonstrating their competitiveness. Meta’s investment in PyTorch, a leading AI framework, and the recruitment of leading AI researchers further demonstrates their commitment to the field.
The note also describes significant revenue opportunities for Meta at GenAI. Raymond James estimates annual revenue potential of $40 billion across five different monetization areas.
These capabilities include GenAI APIs, which will see businesses pay a fee to access the use of Meta’s AI models. Meta can also offer cloud access to its massive artificial intelligence computing power through infrastructure as a service (IaaS).
Raymond James sees potential in AI solutions tailored for small businesses and AI applications in Meta wearables such as smart glasses.
Raymond James emphasizes that Meta can realize these GenAI capabilities without compromising its core social media business.