Meta Platforms (META) AI Integration Performance ROI In Focus

Market is expecting Meta's Q2 revenue to be $38.317 billion, adjusted net income to be $12.927 billion, and adjusted EPS to be $4.71.

Meta CEO Mark Zuckerberg announced the Segment Anything 2 during a wide-ranging fireside chat with Nvidia Corp. CEO Jensen Huang at the SIGGRAPH 2024 event.

This is a significant improvement on the original model which was the popular Segment Anything machine learning model that was released last summer. The original model was designed to identify specific objects and things within an image, bringing that same capability to videos.

SA2, is a “segmentation model,” which is a special kind of computer vision model that can look at an image and describe what it is seeing. So it can identify a dog that is partially obscured by a tree, or a bucket that’s collecting rainwater from a leaky roof, for example.

The difference between SA1 and SA2 is that the latter can be applied to videos, not only images, representing a significant step forward for the computer vision realm.

I would see this new model to be a game changer to Meta Platforms advertising performance, this could mean that video uploaded could be identify and provide a description. But we will need to see if Meta CEO would release more details on the plans they have for this new model.

Despite investor concerns over CapEx, Meta's open-source strategy is expected to democratize AI access and drive innovation, making them a strong AI stock investment. Their AI strategy allows Meta to benefit from market innovations without having to pay for expensive R&D.

Tech companies plan on spending over $1 trillion on artificial intelligence. But the return on investment may take a long time and be disappointing, Goldman Sachs says.

So the question would remain on how AI adoption is progressing, and whether these deployment and implementation are monetizing. For Meta Platforms, I would be focusing on its advertising revenues.

Based on 28 Wall Street analysts offering 12 month price targets for Meta Platforms in the last 3 months. The average price target is $550.00 with a high forecast of $630.00 and a low forecast of $360.00. The average price target represents a 18.10% change from the last price of $465.71.

Meta has given investors a pretty impressive returns of more than 30%, and the progress they are making on the AI have been following the trend and hype.

Question on whether or when these spending would start to return benefits and monetary return would be something that investors could be looking out for.

I am expecting Meta to continue to grow its stock price as they are in a good position for the next phase of AI cycle.

If we were to look at how Meta traded during its previous quarterly earnings, there is a potential upside shown from KDJ, and post earnings, Meta did create an upside after it did fell after its earnings.

The MACD was showing a downside movement, but KDJ is trying to form a BUY signal with upside from J value, so what I would expect Meta to post a positive earnings but the guidance and outlook on its AI integration and advertising revenues for 2024 would be promising.

That could change how Meta stock price might behave after its earnings results.

While we know that Meta has spend quite a significant amount of money on AI, but how have these helped to power its advertising and grow its revenue. And also the adoption of the new models that Meta have provided.

The open-source strategy seem to be working well as the LLM model of Meta has made it to the Open LLM Leaderboard. This could have investors sentiment and interest coming back.

Appreciate if you could share your thoughts in the comment section whether you think Meta would be able to show a significant increase in its advertising revenues with the implementation of their own AI model?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.