Raymond James maintained its bullish stance on Strong Buy-rated META in a note Wednesday, calling it a Generative AI (GenAI) leader and raising its stock target to $550 from $525 on the stock.
Their note highlights Meta (NASDAQ:META)'s "leadership within foundational GenAI building blocks," citing factors like its extensive computing infrastructure, vast user base for training AI models, and top-tier talent pool.
Raymond James believes the market underestimates Meta's capabilities in GenAI. They point to Meta's advantages in areas like compute infrastructure, distribution scale, and talent acquisition.
According to Raymond James' calculations, Meta's AI models rank highly, showcasing their competitiveness. Meta's investments in PyTorch, a leading AI framework, and its recruitment of top AI researchers further demonstrate their commitment to the field.
The note also outlines a significant revenue opportunity for Meta in GenAI. Raymond James estimates a potential $40 billion annual run rate across five distinct monetization avenues.
These avenues include GenAI APIs, where businesses would pay access fees to utilize Meta's AI models. Meta could also offer cloud-based access to its vast AI computing power through Infrastructure as a Service (IaaS).
Raymond James sees potential for AI-powered solutions tailored for small businesses and AI applications in Meta's wearable devices like smart glasses.
Raymond James emphasizes that Meta can pursue these GenAI opportunities without compromising its core social media business.