On Friday, February 2nd, during US stock market trading, Meta Platforms surged by over 20%, setting a new historical high for its stock price. At the same time, a group of technology giants such as Microsoft, Amazon, and Nvidia strengthened, allowing the Nasdaq to lead the three major indexes in strong non-agricultural sectors.
Recently, investment bank Raymond James analyst Josh Beck said, "Forget the 'Big Seven', the popular club for technology stocks may be 'MnM'. MnM usually refers to 'M&M's', a chocolate bean brand under the US food giant Mars Group.".
Beck explained that his MnM refers to Microsoft, Nvidia, and Meta, three large technology companies that will become leaders in the AI era. As the backbone of the AI craze, the positions of Microsoft and Nvidia are self-evident, while Meta is in this elite camp due to its latest performance.
Yesterday after market hours, Meta released its fourth quarter financial report for 2023, showing a revenue of $40.11 billion and a profit per share of $5.33, both higher than Wall Street analysts' expectations. The company executives also revealed during a conference call that through the application of AI technology on advertising platforms, Meta is continuously improving its advertising service capabilities and receiving positive feedback from customers.
Meta CEO Mark Zuckerberg also mentioned that as the community and business continue to grow, "we have had a good quarter. We have made significant progress in driving the vision of AI and the metaverse."
In addition to positive performance reports, Meta announced that it will distribute a quarterly dividend of 50 cents per share to shareholders registered before the close of February 22 on March 26, marking its first quarterly dividend distribution in history. At the same time, the company will also carry out stock repurchases with a scale of up to $50 billion (approximately RMB 360 billion).
Amidst the bombardment of numerous positive factors, investment banks such as Citigroup, Barclays, Wedbush, and Goldman Sachs have raised their target price for Meta's stock price, with Raymond James raising his original $450 to $550 and maintaining a "strong buy" rating. As of publication, Meta's per share is close to $480.
Beck said that Meta's opportunities may not be as obvious on the surface as Microsoft and Nvidia, but he sees the potential for the company to unleash $25 billion to $60 billion in incremental revenue in AI and AIGC, which will be achieved through providing AI chatbots for businesses and AI tools for marketers.
According to Ken Gawrelski, an analyst at Wells Fargo, Meta's investment in AI indicates that the company is "attacking" and these investments have the opportunity to expand the stock's returns. He rated the stock as "overweight" with a target price of $536, compared to $438 previously.
Evercore's Mark Mahaney pointed out that Meta has $65 billion in cash on its balance sheet, and the step of using $50 billion to repurchase stocks at this stage is "correct and appropriate." Mahaney rated the stock as "outperforming the market," and adjusted the target price from $425 to $550.