Earlier this week, Oppenheimer analysts raised revenue estimates for Meta Platforms (META -2.41%) for the first quarter and the rest of 2024. The firm also slightly raised its 2025 revenue growth forecast from 12% to 13%.
The analysts see the additional growth coming from Meta's investments in artificial intelligence (AI), which is fueling more content recommendations and advertising products. Oppenheimer maintained an outperform (buy) rating on the shares with a $585 price target, representing a 12-month upside of about 14% over the current share price.
Is Meta Platforms stock a buy?
As with every other Magnificent Seven member, Meta Platforms is leaning more on AI across its business. Almost a third of recommended text, photo, and other posts in the Facebook Feed are driven by an AI-driven recommendation system. Advertisers can also take advantage of Meta's Advantage+ product which uses AI to automate ad campaigns.
As Meta continues to invest in AI, it should drive higher user engagement across the company's social media platforms and improve advertising performance. This could all have an impact on Meta's revenue and earnings growth and potentially benefit the stock.
The share price rocketed 140% over the last 12 months but still trades at a reasonable valuation of 26 times forward earnings estimates.
The Wall Street consensus has the company's earnings per share reaching $23.15 in 2025. If the shares are still trading at the same forward price-to-earnings ratio of 26 a year from now, the stock price would reach $600. So, the analyst's price target of $585 seems reasonable.
However, if Meta can sustain double-digit earnings growth over the next five years, consistent with the Street's expectations, the stock could be worth significantly more in 2029.
