MetaQ1 financial report to be released soon, analysts optimistic about AI business prospects

According to the Zhītōng Finance and Economics APP, Meta Platforms (META.US) will announce its financial results for the first quarter of 2024 after the U.S. stock market closes on Wednesday. Many analysts are optimistic about Meta's prospects in the field of artificial intelligence.

Meta is laying a solid foundation in the forefront of artificial intelligence. The company's CEO, Mark Zuckerberg, has stated that the company's AI roadmap requires it to build a "large-scale computing infrastructure." On April 18, Meta released an early version of its latest large language model (LLM) Llama 3, which has been integrated into the company's AI system, Meta AI. Meta AI will be embedded in all of the company's applications, including Facebook, Instagram, and WhatsApp, and can be accessed in all search boxes on these platforms.

At the same time, Meta faces competition from companies such as Amazon (AMZN.US) and Alphabet (GOOGL.US), which also want a piece of the pie in the field of artificial intelligence.

April has not been friendly to tech stocks so far. AI chip giant NVIDIA (NVDA.US) fell by 14% last week, and the combined market value of the "Big Seven" tech stocks evaporated by $1 trillion last week. TheStreetPro analyst James Deporre pointed out that after Netflix (NFLX.US) reported good earnings but received a bad response, "people are increasingly worried that even strong earnings may not provide support." He added, "The market expects strong earnings data, but the concern is that the price already reflects this, and the rapid growth rate may cool off."

This week will be crucial for tech stocks. In addition to Meta, companies like Microsoft (MSFT.US) and Alphabet will also report their earnings. Wall Street analysts expect Meta's first-quarter revenue to reach $36.24 billion, compared to $28.65 billion in the same period last year; adjusted net profit is expected to be $14.39 billion, a nearly two-thirds increase year-on-year; and adjusted earnings per share are expected to be $5.55, compared to $3.33 in the same period last year.

In a report with the subtitle "Irresistible Zuckerberg," analysts at Macquarie Securities Research pointed out, "Zuckerberg's aggressive open-source AI strategy may be the most powerful commercial force for AI models." "We believe that Meta has shown that unless competitors can demonstrate real improvements in model capabilities and performance, it can destroy proprietary foundational AI models." The firm did not give a rating for the stock.

It is reported that OpenAI, supported by Microsoft, will launch its latest chatbot ChatGPT5 at some point this year. Analysts say that if ChatGPT5 "fails to live up to the hype, we believe Zuckerberg's gradualist approach to AI development may be correct," "However, if ChatGPT5 provides an order of magnitude improvement, it could change the world." Roth MKM rated Meta as "buy" with a target price of $500 before the release of the first-quarter financial report. However, the investment firm also stated that it is "slightly cautious" about the stock after a 36% increase year-to-date. Analysts at the firm noted that there is a significant debate among investors about Meta's quarterly revenue trajectory in 2024, given stricter comparisons, incremental growth drivers, and the impact of European regulations.

KeyBanc analyst Justin Patterson lowered the target price for Meta from $575 to $555 and reiterated an "overweight" rating on the stock. In a research report, the analyst stated, "From the expansion of Meta Assistant to the release of Llama 3, Meta continues to make progress in artificial intelligence. With advancements in AI, we are keen to understand how management is considering returns and capital expenditures." The analyst added that achieving over 20% year-over-year growth in advertising revenue for Meta in the second quarter is feasible. However, he also noted that the growth in the second quarter may decelerate