Meta's AI and Spatial Computing Ambitions: Analyst Insights on Open-Source Leadership and Founder-Led Success

D.A. Davidson says Meta on track to become open source leader for AI, Spatial computing

Analysts at D.A. Davidson initiated coverage on Meta Platforms (NASDAQ:META) with a "buy" and listed it as a top pick within the mega-cap space for the research firm. They believe the company has set itself up to be the open source leader for the next two major technology platforms -- AI Foundation Compute and Spatial Compute. "While previous technology innovation was driven by nimble startups, AI and Spatial computing require unprecedented scale, reach, and capital. While Alphabet, Apple, Amazon, and Microsoft are crowding into the closed garden side of these platforms, Meta has the pole position on the open side," D.A. Davidson analysts said in their September 10 note. The research firm said unlike previous tech innovations, the aforementioned future platforms can only be won by a megacap. They praised Meta's choice to open source AI compute elements, like Llama, PyTorch, and FAISS, which has positioned the company to be the open source leader in AI foundational model compute. "Meta is already reporting how the advancements in AI are driving better ad delivery and yields. This makes it easier to justify not only the investments in AI compute but also open-sourcing them to capture the benefits from the developer community," the research firm said. On Spatial computing, D.A. Davidson highlighted that the billions Meta spent on Reality Labs have strengthened its position to be the open source winner alongside Apple's closed garden. They also cheered CEO Zuckerberg's leadership, who, they say, has navigated numerous existential challenges successfully. META has a price target of $600, implying an upside of nearly 19%. Stock is up 45% so far this year, while the benchmark S&P index was up 15%.

Meta Exemplifies Benefits Of Founder Leadership More Than Any Other Mega Cap Including Nvidia: Analyst - Meta Platforms (NASDAQ:META)

Analyst sees Meta leading in AI and Spatial Compute, offering growth potential. DA Davidson analyst Gil Luria initiated coverage on Meta Platforms Inc META with a Buy rating and a price target of $600. Luria noted Meta Platforms as a top pick within the mega-cap space, with a combination of emerging leadership in the most critical future technology platforms and an attractive relative valuation. The analyst said Meta Platforms has skillfully positioned itself as the open source leader for major technology platforms: AI Foundation Compute and Spatial Compute. Unlike previous revolutionary innovations, Luria noted that a mega-cap could only win these two future platforms. While previous technology innovation was driven by nimble startups, AI and Spatial Computing require unprecedented scale, reach, and capital, the analyst said. While Alphabet Inc GOOG GOOGL, Apple Inc AAPL, Amazon.Com Inc AMZN, and Microsoft Corp MSFT are crowding into the closed garden side of these platforms, Meta Platforms has the pole position on the open side, Luria noted. The analyst expects the closed-garden side of the AI compute platform to be an expensive fight between the Big Techs, but he noted that Meta is almost entirely alone on the open-source side. Google will need to manage the headwind of transitioning to AI-enhanced Search, Meta is already reporting how the advancements in AI are driving better ad delivery and yields, Luria flagged. In spatial computing, the analyst expects the tens of billions Meta Platforms have poured into Reality Labs to become the moat that positions Meta Platforms as the open-source winner alongside Apple's closed garden. The analyst said Meta exemplifies the benefits of being led by its founder more than any other mega-cap, including Nvidia Corp NVDA. Luria's price target represents 24x 2025 EPS, a premium to Alphabet based on better positioning. The analyst noted that at 21x, Meta Platforms, aside from Alphabet, is the least expensive mega-cap, even before factoring in the option to sever Reality Lab's losses, which would take the multiple down to 16x, thus providing downside protection. For Meta Platforms, Luria projected third-quarter revenue of $40.2 billion and EPS of $5.25. Price Action: META stock is up 0.30% at $506.30 at the last check on Tuesday. Photo by Frederic Legrand - COMEO on Shutterstock Market News and Data brought to you by Benzinga APIs