A New Bullish Stock Call is Sparked by Meta's Key Advantage in the AI Race

Meta Platforms Inc. holds a significant edge in the competitive race for dominance in artificial intelligence (AI), and this advantage comes from its Chief Executive Officer, Mark Zuckerberg, according to one prominent analyst. Jeff Wlodarczak of Pivotal Research Group believes Zuckerberg’s leadership could guide Meta to success in this rapidly evolving technological landscape.

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Wlodarczak expressed his confidence in Zuckerberg’s ability to lead the company through AI advancements in a note to clients titled, “In Zuck We Trust.” In his report, Wlodarczak initiated coverage of Meta’s stock with a strong buy rating and set a target price of $780. His optimistic stance extends beyond Meta to Alphabet Inc., as he also took a bullish view on both Alphabet’s Class A and Class C shares, commonly traded under the ticker symbols GOOGL and GOOG, respectively.

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Wlodarczak’s optimism regarding Meta stems from its current and future positioning within the social media and AI spaces. He specifically highlighted Instagram, Reels, and Stories as key elements of Meta’s product lineup, predicting that they will eventually become the dominant social platforms outside of China. He noted that this shift could come partly at the expense of Facebook itself, but he remains confident that Meta already offers the best social products available, and its ability to integrate new features and enhancements quickly will help drive the platform’s global success.

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In his view, Meta’s management team has consistently demonstrated an ability to respond to market conditions and outmaneuver competitors. Zuckerberg and his team have a history of identifying what works for their rivals and using that knowledge to enhance Meta’s own offerings. This strategic flexibility is one of the reasons Wlodarczak believes Meta is well-positioned for the future, especially in the context of AI’s growing influence on the tech industry.

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Meta has numerous opportunities to leverage AI, and Wlodarczak outlined several ways the company can benefit from its AI initiatives. First, he pointed out that AI can help Meta improve its operational efficiency by automating various aspects of its business. The company can harness AI to reduce costs, streamline processes, and make its overall operations more efficient.

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In addition to improving internal efficiency, Meta is also using AI to enhance the user experience on its platforms. AI is being deployed to innovate Meta’s social products, making them more engaging and personalized for users. Moreover, Meta is utilizing AI to improve its advertising products, which could drive higher engagement and ad revenue. These efforts are well-recognized by Wall Street, as Meta has become known for its use of AI in bolstering its core business operations.

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While much of Meta’s AI strategy is well-understood, Wlodarczak pointed to a new and less-discussed area where Meta could use AI to its advantage—search. He believes that Meta’s investments in AI infrastructure could eventually allow the company to capture a larger share of the search market. This opportunity could be further enhanced if Alphabet, the parent company of Google, faces regulatory or legal challenges.

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Alphabet’s dominance in the search market has long been criticized as a monopoly, and there is potential for the company to be forced to relinquish some of its control over search services, particularly its default position on mobile devices. Governments and courts could impose restrictions on Alphabet’s ability to maintain its stronghold in the search market, creating an opening for other companies, such as Meta, to gain ground.

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Wlodarczak suggested that if Alphabet’s dominance is curtailed, Meta’s AI capabilities could enable it to make significant inroads in the search industry. While Google currently holds an overwhelming market share in search, any regulatory intervention that weakens its grip could offer Meta the chance to carve out a notable position in this space. This possibility adds another layer of potential upside for Meta in the medium term, as it seeks to diversify its business and explore new revenue streams.

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Overall, Wlodarczak’s analysis presents a strong case for Meta’s success in the AI era, with Zuckerberg’s leadership being a central component of the company’s future trajectory. In his note to clients, Wlodarczak emphasized that Zuckerberg’s track record of navigating a rapidly changing tech landscape, particularly as AI continues to evolve, positions Meta to emerge as a leader in the field.

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Wlodarczak remains highly confident that Meta’s product lineup, management team, and AI investments will allow the company to remain competitive in the years to come. While AI is already helping Meta streamline its operations and improve its core offerings, the company’s ability to adapt to market changes and capitalize on new opportunities, such as a potential entry into the search market, underscores its long-term growth potential.

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With a buy rating and a target price of $780, Wlodarczak sees considerable upside for Meta’s stock, driven by its strong positioning in both social media and AI. As the AI race heats up, Wlodarczak’s analysis suggests that Meta, under Zuckerberg’s leadership, is well-equipped to be one of the biggest winners in the space.

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