I’ll be completely frank — there’s no way to argue that Meta Platforms (NASDAQ:META) stock is a bargain. However, it can easily continue to move higher this year, due to Meta Platforms’ advancements in artificial intelligence (AI) as well as the company’s popular social media apps.
There’s an old saying: Keep your friends close and your enemies closer. Does it make sense, though, for Meta Platforms to collaborate with a rival in the generative AI space? The answer could be yes, as Meta Platforms teams up with another tech titan to take machine-learning functionality to the next level.
META Stock Gets a Notable Upgrade
Whether you use the trailing price-to-earnings (P/E) ratio or another commonly cited metric, you’ll likely find that Meta Platforms is above the sector median. This might make some value-focused individuals reluctant to invest in Meta Platforms now.
There’s at least one notable expert on Wall Street, however, who’s not reluctant to recommend META stock. Specifically, TD Cowen analyst John Blackledge upgraded the stock from “market perform” to “outperform” and raised his price target on Meta Platforms shares from $220 to $345.
Blackledge cited Meta Platforms’ successful commercialization of its social media apps, and particularly Instagram and Reels (which is similar to TikTok). Survey data, according to Blackledge, showed “further Reels engagement growth as well as rising time spent overall for” Instagram. Additionally, the analyst stated that “Meta is currently ramping Reels monetization, and it should be a driver of top line over the next few years.”
Meta Platforms Forms a Crucial Partnership for AI Technology
A while ago, Microsoft (NASDAQ:MSFT) invested billions of dollars in OpenAI’s ChatGPT AI chatbot technology. That turned out to be a brilliant move for Microsoft.
Meanwhile, Meta Platforms is working diligently to develop its own generative AI technology. Thus, Meta competes with Microsoft — but now, the two companies are actually working together.
Just recently, Meta Platforms introduced its open-source AI large language model (LLM) platform, Llama 2. It could be said that Llama 2 competes against ChatGPT. But then, as Bloomberg reported, Meta Platforms is making Llama 2 “available for commercial use through partnerships with major cloud providers including Microsoft Corp.”
Now, there’s a twist you probably didn’t expect. However, it also makes perfect sense. By collaborating with Microsoft and other tech firms, Meta Platforms can effectively finetune and improve Llama 2. Then, future Llama iterations can be more powerful and accurate.
Hence, Meta Platforms is allowing the community of developers — including rival companies — to stress-test Llama 2. It’s a savvy move and a win-win for Meta Platforms, Microsoft and generative AI developers overall.
Prepare for More Gains With META Stock
If you apply the P/E ratio and similar metrics to Meta Platforms, you might hesitate to take a share position. Waiting and hesitating could come with a huge opportunity cost, however.
Meta Platforms will undoubtedly continue to offer value through its family of social media apps. Plus, the company is working with Microsoft and other firms to provide the latest and greatest in AI technology. Therefore, investors can confidently hold a moderately sized share position in META stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
