Barclays Analysts See Meta as Well-Positioned for Growth in AI

Barclays analysts reportedly believe that Meta Platforms, with its integration of artificial intelligence (AI) technology into its apps, is well-positioned for growth in the AI industry.

The investment firm has identified Meta as a potential frontrunner in the field of AI, with its four mega-apps — WhatsApp, Messenger, Instagram and Facebook — potentially serving as an “interaction layer” for users to seamlessly access information and conduct transactions using AI technology, Seeking Alpha reported Wednesday (Oct. 5).

Meta recently unveiled new generative AI tools, including AI image editing on Instagram and new chat stickers for its various platforms, according to the report. By incorporating AI technology, Meta aims to increase engagement among its 800 million-plus users in 2024. This move could potentially boost the company’s core ad revenue by $16 billion, primarily driven by higher cost per thousand (CPM) rates. However, it may also have a significant impact on the company’s cost of goods sold, potentially exceeding $10 billion.

Barclays, which maintains an Overweight rating and a $410 price target on Meta’s stock, believes that the combination of new services with an existing distribution mechanism is crucial for the widespread adoption of consumer internet products, the report said.

The success of Snap’s AI chatbot, My AI, which has garnered over 150 million users in just seven months, serves as a testament to this approach, per the report. This translates to an estimated 100 million daily active users (DAUs), accounting for 25% of the total DAUs.

Meta Platforms is also developing AI personas with a celebrity-infused theme to address various everyday consumer use cases, such as gaming, cooking, workouts, companionship, travel and shopping.

Barclays suggests that this approach, coupled with the use of celebrities’ faces and expressions, could resonate particularly well with non-tech-savvy consumers who are already active on WhatsApp and Instagram, according to the report.

This news comes as other tech giants are also continuing to roll out new offerings powered by AI.

For example, Google unveiled a digital assistant powered by AI on Wednesday (Oct. 4), saying the tool will be available on Android and iOS mobile devices in the coming months.

About two weeks early, on Sept. 26, Microsoft announced that it was beginning the rollout of an AI-powered assistant designed to transform how users interact with technology.