When it comes to artificial intelligence, analysts say you can't go against the Zuck.
Zuck, of course, is Mark Zuckerberg, co-founder and CEO of facebook parent Meta Platforms. (GOAL) and the social media giant is staking a serious claim on the wild frontier of ai.
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Zuckerberg has said that the company's roadmap for ai requires it to build a “massive computing infrastructure.” He wasn't just whistling at Dixie.
On April 18, Meta released the first versions of its latest large language model, Llama 3, which was integrated into Meta ai, the company's artificial intelligence system.
Meta ai will be integrated into all of the company's apps, including facebook, instagram and WhatsApp, and will be accessible in all search boxes on those platforms.
Zuckerberg faces competition from companies like amazon (AMZN) and Alphabet, Google's parent company (GOOG) who also want a piece of the ai pie.
This is a big week for big tech companies, like Meta and Tesla (TSLA) microsoft (MSFT) and alphabet (GOOG) are scheduled to report earnings.
So far, the second quarter has been quite tough for the technicians.
NVIDIA (NVDA) the favorite artificial intelligence chip of the day, saw its shares fall 14% last week and the mega-cap stock called Magnificent 7 lost a trillion dollars in collective market value.
James “Rev Shark” Deporre from TheStreetPro noted that after the bad response to the good Netflix (NFLX) results, “there is growing concern that even robust reporting is not enough.”
Analysts point to 'fierce open source ai strategy'
“The market is expecting strong numbers, but the concern is that it is already priced in and the torrid growth rate will most likely cool down,” he said.
Meta Platforms leads the tech earnings parade and the company is scheduled to report first-quarter results on Wednesday, April 24.
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Analysts surveyed by FactSet expect Meta to earn $4.32 per share during the first quarter on $36.1 billion in revenue, compared with $2.20 per share a year earlier on $28.6 billion in revenue.
In February, Meta posted fourth-quarter adjusted earnings per share of $5.33 and revenue of $40.1 billion. Wall Street expected adjusted earnings of $4.94 per share and revenue of $39 billion. A year earlier, Meta reported earnings of $1.76 per share on revenue of $32.2 billion, meaning revenue grew 25% year over year and profits tripled.
Analysts at Macquarie Equity Research like what they see coming out of Meta.
In an April 22 report subtitled “Can't buck the Zuck,” the firm noted that “Zuckerberg's fierce open source ai strategy is probably the strongest commoditizing force for ai models, as Call 3 70b -Instruct is a freely available GPT-4 class.” model that can run on consumer hardware.”
“We believe Meta has demonstrated that it can crush the economics of the proprietary base ai model unless competitors can show true step-function improvement in the model's capabilities and performance,” wrote the analysts, who have no rating for the company's shares.
OpenAI, the Microsoft-backed company behind ChatGPT, is said to launch ChapGPT5, its latest chatbot, sometime this year.
Macquarie analysts said that if ChapGPT5 “doesn't live up to expectations, we think Mark Zuckerberg could be right about incrementalism in ai development.”
“However, if GPT-5 delivers an order of magnitude improvement, it could change the world,” the company said.
Other analysts have intervened in Meta's next results report.
Company 'marginally cautious' on earnings
Roth MKM affirms a Buy rating and $500 price target on Meta Platforms ahead of the company's first-quarter results. However, the investment firm said it is also “marginally cautious” on the stock after a 36% rise so far this year.
The 2024 quarterly revenue cadence under tighter comparisons, incremental growth drivers and the impact of European regulations are big unresolved debates among investors, the analyst tells them in a research note.
More ai actions:
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- Veteran Analyst Offers Strong Warning on Nvidia Stock
- Analysts renew price target for Microsoft shares amid
Meta received privacy complaints in February. technology/meta-targeted-privacy-complaints-by-8-eu-consumer-groups-2024-02-29/”>Reuters reportedwhile eight EU consumer groups called on watchdogs to take action against facebook's owner over alleged breaches of the bloc's privacy rules when it collects user data.
Complaints from consumer groups in the Czech Republic, Denmark, France, Greece, Norway, Slovakia, Slovenia and Spain to their countries' data protection authorities add to previous complaints about Meta's trove of user data.
The European Data Protection Board, the EU's privacy watchdog, said on April 17 that Meta and other large online platforms should allow free use of their services without targeted advertising.
KeyBanc analyst Justin Patterson lowered the company's price target on Meta Platforms to $555 from $575, reiterating an Overweight rating on the stock.
“Meta continues to show progress with ai, from the expansion of Meta Assistant to the launch of Llama 3,” he said in a research note. “Given the progress with ai, we are curious to see how management thinks about returns and 'capital expenditures.'
The analyst said advertiser spending in China remains a key focal point, particularly around Temu, the online marketplace operated by Chinese e-commerce company PDD Holdings, and rising tensions with China.
He said year-on-year advertising revenue growth of more than 20% was achievable in the second quarter, but also said growth would likely slow afterward.
Patterson said Meta's wide range of revenue guidance around unrest in the Middle East could alarm investors, particularly if the first-quarter outperformance moderates.
“Unlike the fourth quarter, we are more cautious that revenue forecasts could surprise positively,” the analyst said.
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