- Meta will report fourth-quarter earnings after the close on Wednesday.
- Traders are carefully watching for important information on how to make money from AI.
- DeepSeek’s surprising launch this week has increased the importance of earnings for large companies.
Investors are getting ready for Meta’s fourth-quarter earnings report, which will come out after the market closes on Wednesday. This news comes during a tough week for tech stocks.
The main company of Facebook may face more attention this quarter after a big drop in the tech industry on Monday, caused by a new AI model that disrupted the positive trends in the US stock market.
On Monday, Meta’s stock fell by as much as 3% because of a larger market decline caused by DeepSeek, an AI app from a Chinese company that has surprised US investors about technology. The stock bounced back and went up nearly 3% on Tuesday, reaching $677 a share.
Wedbush analyst Dan Ives said in a note on Tuesday that the worry about DeepSeek in the tech world is likely overblown and will quickly pass as more information about DeepSeek’s model becomes available. “We still see this as a great chance to buy, and it won’t affect the growth of AI spending in the AI Revolution.”
Meta investors will be on the lookout for important news in the company’s earnings call. They want to hear about expected revenue for 2025, how the company plans to make money from AI, and how it could gain from issues related to TikTok.
Here’s what Wall Street thinks about Meta’s earnings report for the fourth quarter.
Bank Of America: Many Good Factors
Bank of America analysts believe Meta may experience several good events this year.
The bank stated that the tech company is still just starting to make money from its AI projects and to add AI features to its chat apps like WhatsApp and Messenger.
“AI monetization should further ramp in 2025, driving strong relative advertising growth vs the industry,” the bank wrote in a note.
Meta could gain if TikTok faces problems, as some advertisers might switch to Meta. BofA analysts reported that TikTok is expected to earn about $12 billion from ads last year, according to eMarketer’s prediction.
Meta plans to cut another 5% of its workers this year, which might help increase its profits.
“Given a steady economic environment, increasing income from AI in advertising, rising messaging revenues, and ongoing control of costs (including recent job cuts), analysts expect the stock to perform well in 2025.”
The bank confirmed its “Buy” rating on the stock and increased its price goal to $710 per share, suggesting a 4% potential increase from the current price.
JMP: “AI Investments Seem To Be Happening Early.”
Meta plans to spend over $60 billion this year and will greatly increase its AI teams. The release shows that the markets are just starting to invest in AI, which is good news for large tech companies, according to JMP analysts.
Meta’s big number of users will help spread the company’s AI projects, the analysts said. The company’s chat apps, WhatsApp and Messenger, might be good places to begin introducing some of its AI products.
“The fact that Meta is willing to invest shows us that they expect good revenue in the near future, as they continue to gain from their AI projects,” the firm said in a note.
The company kept its “Market Outperform” rating for the stock and set a price goal of $750, suggesting a 10% increase from where it is now.
Truist Securities: ‘Main Winner From TikTok’s Problems’
Truist predicts that Meta will grow significantly this year, noting factors such as increased political spending and spending from Chinese marketers on its platforms.
Analysts expect the company to make $47 billion in total income, which is a 17% increase compared to last year.
The company will probably benefit a lot from TikTok’s problems in the US. A social media tracking site called Sensor Tower noted that Threads had a big increase in how long users spent on the app in the fourth quarter. Analysts believe this was probably because people were worried that TikTok might be shut down.
Youssef Squali, a managing director at Truist, said in a note that he believes META will benefit from TikTok’s problems and is one of his top picks for 2025.
“We still really like META as we head into 2025. We believe it will do well because of strong product demand, good performance, and gaining market share, all while maintaining higher profits even with significant spending on AI and machine learning.” We believe that AI agents and AR/VR goods could make a positive impact in the future.
The company confirmed its “Buy” recommendation for the stock and set a price goal of $700, suggesting a 3% increase from the current price.
Jefferies: “Best AI choice”
Jefferies experts believe that Meta is likely to keep growing strongly. They expect to earn about $46.5 billion in the fourth quarter and around $41.8 billion in the first quarter.
“We believe that TikTok being banned or temporarily shut down could help Meta in the first quarter. However, we think Meta will be cautious about how much this will affect them because the situation is still changing.”
Other signs are also looking good for Meta’s future. The company enjoyed high advertising spending in October and November. Teenagers have said they would use Instagram clips if TikTok gets banned in the US.
“We are pleased that META is able to keep growing its revenue. This is due to better engagement from AI efforts, more efficient advertising, and new ways to make money, like through WhatsApp and Llama.”
The company maintained its “Buy” rating on the stock and set a price goal of $715, suggesting a 5% increase from the current price.
CFRA Research: More attention on AI
According to CFRA Research, Meta likely announced its plan for $60 billion of capex this year to stress its focus on artificial intelligence.
“We think it makes sense for META to get the news out of the way before earnings on Jan. 29 and note the increased focus on AI will likely translate to higher revenue potential over time,” Angelo Zino, senior equity analyst at CFRA, wrote.
Also Read: People Who Work at Meta React to Plans to Fire Poor Workers During the “year of Intensity.”
“Investors will be watching for guidance on the first quarter next week and we hope that growth rates don’t slow down more than expected. We are expecting revenue growth in the mid-teens for 2025, but foreign exchange rates might be a challenge. We also want to hear META’s thoughts on how they plan to make money from AI in 2025 and 2026.”
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