Can Meta's AI Tools Disrupt Google (GOOGL) and OpenAI? Analysts Weigh In
Meta Platforms (META) hosted its first AI-focused event, LlamaCon, and analysts came away feeling positive about the company's direction in artificial intelligence. Five-star Bank of America analyst Justin Post, who has a Buy rating and $640 price target on Meta, said that the event showed how flexible Llama is and how strong Meta's open-source position has become. He pointed out that Llama has now been downloaded over 1.2 billion times, offers a wide range of features, and is cheaper than many competitors. Meta also launched a new AI app, Llama API, and added tools for security and app development.
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Separately, Morgan Stanley's 4.5-star rated analyst, Brian Nowak, said that Meta's new AI assistant app isn't as advanced as ChatGPT or Google's (GOOGL) Gemini just yet, but it's still early. He believes it has potential, especially if it uses Meta's massive amount of user data to offer personalized help, like recommending restaurants or planning trips. Since Meta is offering this app for free while others charge for similar tools, it could gain users faster. However, Nowak also said it's still uncertain whether the app will generate meaningful revenue or become a real threat to Google Search.
Meanwhile, Jefferies 4.5-star analyst Brent Thill called the event an important step in Meta's move toward becoming a cloud platform. Until now, developers accessed Llama through other cloud providers like Amazon Web Services (AMZN) and Microsoft Azure (MSFT), but Meta's new Llama API allows it to make money directly from its own cloud services. Thill also pointed to new partnerships with chipmakers Groq and Cerebras and estimated that Llama could be worth $80 billion, based on other AI companies' valuations. In addition, he said that Meta's large user base and data access give it a major advantage.
Is META Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 36 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average META price target of $680.53 per share implies 26.1% upside potential.
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