Meta Platforms Inc's shares rose 11% on Thursday after the Facebook owner dazzled Wall Street with an earnings report that showed progress towards the "year of efficiency" and a return to growth, thanks to AI-powered content recommendations.
The company is set to add nearly $60 billion to its market valuation, if premarket gains hold. The rally also lifted other tech companies from Snap Inc and Pinterest Inc to Amazon.com Inc by as much as 3.3%.
"If you want to be treated and valued like a growth stock, you need growth! And this is precisely what Meta delivered returning to growth… just as questions around a potential recession get louder," Bernstein analyst Mark Shmulik said in a note.
Shmulik was among the 27 analysts who raised their price targets on Meta, pushing the median view to $260, which represents an upside of nearly 25% to a stock that has already risen over 70% this year to lead gains among Big Tech companies.
Meta beat expectations for first-quarter profit and revenue, which rose for the first time in nearly a year, the latest sign that American tech giants were digging themselves out of a slump that has sparked tens of thousands of layoffs.
The results also underscored the rising importance of AI, with CEO Mark Zuckerberg saying the tech was helping to boost traffic to Facebook and Instagram and earn more in ad sales.
"We believe AI has played a crucial role in shifting Meta from showing a more limited set of friends, family, and followed content to an almost unlimited set of recommended content now available in Reels and Feed," J.P. Morgan analysts said.
Zuckerberg also said the company, which has carried out several expensive overhauls to bolster its core business, was no longer behind in building out its AI infrastructure.
"Year of efficiency (now) paves the way to AI offense," Roth MKM's Rohit Kulkarni said.
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