Meta's Q3 Earnings Preview: AI Innovations and Search Engine Plans Fuel Optimism

Meta Platforms Q3 Earnings Preview: AI In Focus With New Search Engine Plans, Analyst Says Company 'Well Positioned' - Meta Platforms (NASDAQ:META)

A Meta analyst sees a heavier emphasis on AI coming from Meta's conference call for the third quarter. A new report that Meta Platforms Inc META is building its own search engine could put a greater emphasis on AI growth when the company reports third-quarter results after market close Wednesday. Earnings Estimates: Analysts expect Meta Platforms to report third-quarter revenue of $40.27 billion, up from last year's $34.15 billion total in the third quarter, according to data from Benzinga Pro. The company has beaten analyst estimates for revenue in eight straight quarters. Analysts expect Meta Platforms to report third-quarter earnings per share of $5.24, up from last year's third-quarter total of $4.39. The company has beaten analyst estimates for earnings per share in six straight quarters. Guidance from Meta calls for third-quarter revenue to be in a range of $38.5 billion to $41 billion. Read Also: Meta Platforms Is Building AI-Powered Search Engine To Slash Reliance On Alphabet's Google, Microsoft: Report What Analysts Are Saying: A new report from The Information details that Meta is developing its own search engine to power the Meta AI chatbot is intriguing for Bank of America analyst Justin Post ahead of the earnings report. "We think the report makes sense as reducing dependence on large tech peers likely a strategic priority for Meta," Post said. The analyst said Meta's conference call will likely feature commentary on artificial intelligence and search capabilities. "The article suggests that by developing its own search engine, Meta aims to reduce reliance on Google Search and Microsoft Bing, which currently provide information for Meta AI." Post said Meta creating its own search engine would be consistent with the company's long-term goal of reducing "dependence on competitor platforms." "We think Meta is well positioned to develop internal AI assistant and query response capabilities." The analyst highlights Meta's large user base and content that could help train its own LLM (large language model). Post said the news could be a negative for Alphabet down the road, but the stock did not react to the report. "If users increasingly engage with Meta AI for information, there is a possibility that a portion of internet traffic could shift away from Google Search." Here are other recent analyst ratings for Meta Platforms and their price targets: Bernstein: Maintained Outperform rating, raised price target from $600 to $675 Jefferies: Maintained Buy rating, raised price target from $600 to $675 TD Cowen: Maintained Buy rating, raised price target from $600 to $675 Mizuho: Maintained Outperform rating, raised price target from $600 to $650 Cantor Fitzgerald: Reiterated Overweight rating with $670 price target Goldman Sachs: Maintained Buy rating, raised price target from $555 to $636 Key Items to Watch: Ad impressions and the price per ad will be key metrics, and some will be watching to see if there is strength in the online advertising segment. Meta reported second-quarter ad impressions and the average price per ad, each up 10% year-over-year. The progress of Meta's AI growth will be closely observed outside the potential search engine. "We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year," Meta CEO Mark Zuckerberg said in second-quarter results. The company's costs will also be closely watched in the quarter, with Meta raising its 2024 capital expenditures to a range of $37 billion to $40 billion after second-quarter results. META Price Action: Meta stock was up 2.6% to $593.28 on Tuesday, versus a 52-week trading range of $296.86 to $602.95. Meta stock is up 70.4% year-to-date in 2024. Read Next: Elon Musk Jet Tracker Suspended On Threads, Instagram: 'This Situation Reflects Poorly On Meta' Photo: Shutterstock Market News and Data brought to you by Benzinga APIs

What's Going On With Meta Platforms Stock Ahead Of Q3 Earnings? - Meta Platforms (NASDAQ:META)

Consensus estimates call for earnings of $5.24 per share and revenue of $40.253 billion, but channel checks show a beat could be brewing. Meta Platforms Inc META shares are up nearly 25% over the past quarter. The company is gearing up to report earnings again next week. Here's a look at what you need to know ahead of the report. What To Know: Meta is scheduled to report third-quarter financial results after the market close on Oct. 30. The company is expected to report earnings of $5.24 per share and revenue of $40.253 billion, according to estimates from Benzinga Pro. Meta has exceeded analyst estimates on the top and bottom lines in six consecutive quarters heading into the third-quarter print. Last quarter, Meta beat analyst estimates as revenue jumped 11% year-over-year and daily actives climbed 7%. The company noted at the time that Meta AI was on track to be the most used AI assistant in the world by the end of the year. "We had a good quarter. We continue to see strong engagement across our apps and we have the most exciting roadmap I've seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall," CEO Mark Zuckerberg said in the second-quarter earnings release. Check This Out: Meta's Reels Monetization and AI Innovations Drive Top AI Pick: Analyst Several analysts have already released positive updates ahead of earnings next week. BofA Securities maintained a Buy rating and price target of $630 earlier this week, calling Meta a top AI pick. The analyst firm expects Meta's quarterly results to exceed consensus estimates. Jefferies also maintained a Buy rating on Meta this week and lifted the price target from $600 to $675. Other recent analyst changes include a price target increase to $675 by TD Cowen, an Overweight reiteration from Cantor Fitzgerald and a price target bump to $650 from Mizuho. Mizuho analyst James Lee maintained an Outperform rating on the stock heading into earnings as he anticipates a beat-and-raise quarter from the tech giant next week. Ad agency checks showed that ad spending is ahead of consensus estimates and at the high-end of Meta's guidance for 20% growth year-over-year, the analyst said. "Although the stock is a crowded trade into the print, we believe it is the only big tech internet name that could beat and raise with substantial optionality in messaging and Gen-AI for creative," Lee said. Meta will hold a conference call at 5 p.m. ET next Wednesday to discuss the company's quarterly performance with analysts and investors. META Price Action: Meta shares are up approximately 60% year-to-date heading into the report. The stock was up 0.54% at $566.74 the time of publication Thursday, according to Benzinga Pro. Photo: Shutterstock. Market News and Data brought to you by Benzinga APIs

Meta earnings are coming this week. Wall Street expects big growth

Wall Street is projecting double-digit profit and sales growth from Facebook parent Meta Platforms, as the tech giant continues to ramp up its artificial intelligence efforts. Meta is expected to report earnings per share of $5.21 when it posts third-quarter results after-the-bell Wednesday, according to estimates compiled by FactSet (FDS+0.47%). That's a profit of $13.49 billion, up more than 16% from the year ago period. They are similarly projecting an 18% jump in sales from the same period last year to $40.19 billion for the quarter. These results would be an early reflection of the tech giant's ramped up AI efforts. This year alone, the company's total spending is expected to hit between $35 billion and $40 billion, driven in large part by burgeoning AI costs, according to JPMorgan Chase (JPM+0.71%) analyst Doug Anmuth. That figure could reach $42 billion next year. Chief executive Mark Zuckerberg showed how some of those investments have already begun to pay off at the company's annual Connect conference in September. Zuckerberg said Meta AI is on track to become the most-used AI assistant in the world by the end of this year, with almost 500 million monthly active users as of today. Meta added the AI assistant to its popular social media platforms, including Instagram and Facebook (META+0.53%), in April. Zuckerberg also announced Llama 3.2, Meta's first open-source, multimodal large language model (LLM). The CEO said that the AI industry has reached an inflection point and that Llama has become "something of an industry standard." This has fueled a strong year for the company, with shares up roughly 67% year-to-date. A single share of Meta stock is valued at around $577, approaching an all-time high. In a recent note, Jefferies (JEF+1.97%) analysts reiterated their belief in Meta's ability to sustain double-digit revenue growth, pointing to a combination of higher engagement from AI investments, increased advertiser efficiency, and the ramping up of other monetization formats, including WhatsApp and Llama.

Meta's Reels Monetization and AI Innovations Drive Top AI Pick: Analyst - Meta Platforms (NASDAQ:META)

Post expects Meta's capex to reach up to $40B as AI infrastructure investments continue BofA Securities analyst Justin Post maintained a Buy rating on Meta Platforms Inc META with a price target of $630. Meta's third-quarter earnings will likely exceed expectations with revenue of $40.4 billion and EPS of $5.35, slightly above Street estimates of $40.2 billion and $5.19, respectively, as per Post. The growth is driven by several factors, including new AI tools and CRM integration, which are boosting return on investment (ROI) and increasing ad spend. Also Read: Meta's Smart Glasses Dominate Ray-Ban Stores, AI Features Still Missing Messaging and Reel monetization are ramping up, and a modest 100-200 bps benefit from political ad spending is expected. Post noted that Meta could lower the upper end of its 2024 expense guide by $1 billion, from $98.2 billion to $96 billion -- $98 billion, thanks to layoffs and a reduction in job openings. Capex, however, could trend toward the higher end of guidance, between $37 billion -- $40 billion, as Meta continues to invest heavily in AI infrastructure, as per the analyst. The fourth-quarter revenue guidance will likely range between $45 billion -- $47.5 billion, with ad revenue growth decelerating by 2 points to 16% year-over-year, he noted However, as per Post, growing AI benefits for ad targeting, more robust Reels usage, and incremental political ad spending could offer marginal upside. He said Meta remains well-positioned in AI, with analysts forecasting multi-year growth opportunities, particularly through generative AI and infrastructure developments. Despite potential near-term volatility due to high expectations, Meta's stock has risen 63% year-to-date, maintaining its status as a top AI pick. Price Action: META stock is up 1.23% at $582.21 at last check Tuesday. Also Read: Amazon Strikes at Nvidia's Stronghold Through Databricks Deal, Cutting AI Costs by 40% Image via Shutterstock Market News and Data brought to you by Benzinga APIs

Meta stock primed for AI-fueled revenue surge, says JMP -- growth beats the odds By Investing.com

On Wednesday, JMP Securities maintained a Market Outperform rating for Meta Platforms Inc. (NASDAQ: NASDAQ:META) stock, with a steadfast price target of $635.00. The firm's analysis indicates that Meta is poised to sustain growth due to artificial intelligence (AI) enhancements and its substantial presence in the eCommerce sector, which is Meta's primary advertising vertical. The analyst highlighted the resilience of Meta's growth trajectory, despite the company's already large revenue base. By examining Internal Revenue Service (IRS) tax filing data, the firm deduced that eCommerce and smaller revenue companies tend to invest more in advertising. This trend is seen as favorable for Meta, as it aligns with the company's significant exposure to these intensively advertising sectors. The assessment further suggests that Meta's growth could surpass general Gross Domestic Product (GDP) expansion rates. AI product developments are expected to contribute additional momentum to this baseline growth. The firm also noted adjustments to their Meta revenue forecasts, taking into account foreign exchange (FX) factors. These FX considerations are anticipated to provide a positive influence on Meta's revenue growth for the second half of 2024 and into 2025. Meta's strategic focus on AI and its strong foothold in the growing eCommerce space appear to underpin the company's potential for continued revenue increases. The updated forecasts by JMP Securities reflect an optimistic outlook for Meta's performance in the coming years, bolstered by technological advancements and market dynamics. In other recent news, Meta Platforms Inc. has seen a series of significant developments. The company scored a victory in a lawsuit over child safety disclosures, with U.S. District Judge Charles Breyer dismissing a shareholder lawsuit, barring the plaintiff from filing another lawsuit on the same grounds. In contrast, a Massachusetts judge denied Meta's bid to dismiss a lawsuit accusing it of designing Instagram to addict young users. Meta has also reintroduced its facial recognition technology after a three-year hiatus to combat fraudulent advertisements, known as "celeb bait," which exploit public figures' images. Approximately 50,000 public figures will be enrolled in a trial to identify and block these scam ads. The tech giant has also launched new artificial intelligence models, including a "Self-Taught Evaluator," which could reduce human involvement in the AI development process. This tool breaks down complex problems into smaller, logical steps, enhancing accuracy in fields such as science, coding, and mathematics. On the financial front, TD Cowen has raised its price target on Meta's shares from $600.00 to $675.00, maintaining its Buy rating, in light of anticipated 19% year-over-year revenue growth in the third quarter. Similarly, Mizuho Securities has raised its price target on Meta from $600 to $650, maintaining an Outperform rating. These developments reflect a dynamic period for Meta, as it navigates legal challenges, technological advancements, and financial forecasts. Meta Platforms Inc.'s financial metrics and market performance align well with JMP Securities' optimistic outlook. According to InvestingPro data, Meta's revenue growth stands at 24.28% for the last twelve months as of Q2 2024, with a robust quarterly growth of 22.1% in Q2 2024. This strong growth trajectory supports the analyst's view on Meta's ability to sustain expansion despite its large revenue base. The company's focus on AI and eCommerce is reflected in its impressive financial performance. Meta boasts a gross profit margin of 81.49% and an operating income margin of 41.21%, indicating efficient operations and strong profitability. These metrics underscore Meta's ability to leverage its market position and technological advancements effectively. InvestingPro Tips further reinforce the positive outlook. One tip notes that Meta "holds more cash than debt on its balance sheet," which provides financial flexibility for continued investments in AI and other growth initiatives. Another tip highlights that "8 analysts have revised their earnings upwards for the upcoming period," aligning with JMP Securities' positive stance on the company's future performance. For investors seeking a deeper understanding of Meta's potential, InvestingPro offers 16 additional tips, providing a comprehensive analysis of the company's strengths and market position.