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Meta (META), plans to increase its AI spending. The stock of the social media giant didn’t fall.
Shares of the Facebook parent surged more than 4% to just over $572 Thursday after the social media giant a day earlier eported better-than-expected quarterly results and pointed to growth in advertising—which accounts for the bulk of Meta’s revenue—aided by its investments in AI. The reaction is a marked departure from last year when shares fell after Meta announced that it planned to spend even more on AI amid concerns about whether the expenditure would be justified.
Mark Zuckerberg told investors in Wednesday’s earnings conference that AI had already improved his ability to target and find the audiences who would be interested in his products.
Zuckerberg said that people are spending more time using Meta’s apps due to improvements in its recommendation system. Users now spend 7% more on Facebook. Instagram saw a 6 percent increase. Time on Threads—which launched in 2023—jumped 35% as users also grew.
Analysts—including those from Citi, JPMorgan, Wedbush, and Jefferies—raised their price targets for the stock Thursday, pointing to Meta's engagement and targeting gains. Analysts from Bank of America bumped their target to $690 from $640, citing Meta's “tangible business results” from AI.
Morgan Stanley analysts who raised their target price to $650 per share from $615 per share said Meta was “best in class, and still improving relative ad product.” [return on investment] are delivering results.”
“Even with our significant investments, we don't need to succeed in all of these areas to have a good ROI," Zuckerberg said during Wednesday call. “But if this happens, then I believe that we will be extremely happy with the investment that we are currently making.”
