Meta Platforms Q1 Earnings Focus: Ad Sales and AI Growth

Meta Platforms

When Meta Platforms (NASDAQ:META) unveils its first-quarter results on Wednesday, investors will closely scrutinize the social media giant’s advertising revenue and updates on its artificial intelligence endeavors.

Analysts anticipate the Menlo Park, California-based company to report Q1 EPS of $4.36, with revenue projected to climb 26.4% to $36.22 billion.

A robust performance from the Facebook parent in February, surpassing revenue forecasts by nearly $1 billion and initiating its inaugural dividend, garnered positive investor sentiment, propelling the stock to surge over 20% since its fourth-quarter earnings announcement.

Overall, the stock has surged by 39% year-to-date, outpacing the 5% increase in the broader S&P 500 Index.

A resurgence in user growth and advertising sales during the quarter, coupled with enthusiasm surrounding AI initiatives, contributed to Meta’s recovery from its 2022 downturn.

BofA analysts highlighted the robust digital advertising landscape in Q1, forecasting Meta to report total revenue at the higher end of its guidance range and potentially surpass Wall Street estimates.

Analyst Youssef Squali from Truist emphasized Meta’s significant investments in AI initiatives, noting improved ranking and recommendation outcomes for users and advertisers, which could strengthen META’s competitive position for years to come.

Jefferies analyst Brent Thill suggested that Meta might capture 50% of incremental industry ad spending in 2024, a record high surpassing its 33% in 2023, with ad revenue potentially growing at 20%, more than double the industry average of 9%, aided by generative AI.

Meta also entered the Generative AI arena with its AI assistant, Meta AI, powered by Llama 3, integrated across various platforms and launched in additional global markets.

BofA analyst Justin Post reiterated a positive outlook on Meta, highlighting the potential of Reels, Messaging, and AI-driven ad enhancements to deliver positive product outcomes and revenue momentum in 2024.

Over the past three months, EPS estimates have witnessed 21 upward revisions, with no downward revisions, while revenue estimates have seen 30 upward revisions and no downward movements.

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