Morgan Stanley analysts told investors in a note Monday that Meta Platforms (NASDAQ:META) is positioned to benefit from the AI-focused environment.
In the note, analysts explained that the firm sees AI-driven behavior change leading to durable multi-year online ad growth, with META positioned to drive and benefit from the changes through algo improvements, generative AI, and paid verification.
"We see META benefitting from AI-driven enhancements across core FB and Instagram...leading to more durable multi-year revenue growth," wrote analysts, who have an Overweight rating and a $250 price target on META shares. "While we acknowledge it's early for generative AI, Meta has now launched a new LLM (LLaMA) and open-sourced three computer-vision related models (SAM, Animated Drawings, DINOv2) which over time should empower creators and advertisers."
Furthermore, the firm sees generative AI tools leading to more creative and personalized organic and paid content, driving engagement, conversion, and ad unit monetization higher.
"The fact that META's 10mn+ advertisers (which are largely SMBs) will be able to create significantly more personalized ads (at low cost) is going to be a differentiator," the analysts added. "While still very early, META's Make-A-Video (text-to-video technology) will likely be a further differentiator for engagement and monetization. Lastly, while the LLM and generative AI space is still developing, our analysis of DeepMind's work showing how the amount of data fed through models leads to higher accuracy should also be a competitive advantage for META's products."