Meta is a leader in GenAI and Raymond James raised its price target, Investing.com

Raymond James remained bullish on META with a Strong Buy rating in a note Wednesday, calling it a Generative AI (GenAI) leader and raising his stock target from $525 to $550.

Their note highlights Meta’s (NASDAQ:) “leadership within the fundamental GenAI building blocks,” citing factors such as its extensive computing infrastructure, massive user base for training AI models, and top-tier talent pool.

Raymond James believes the market is underestimating Meta’s capabilities in GenAI. They point out Meta’s advantages in areas such as computing infrastructure, deployment scale, and talent acquisition.

According to Raymond James’ calculations, Meta’s AI model ranks highly and demonstrates competitiveness. Meta’s investment in PyTorch, a leading AI framework, and hiring of top AI researchers further demonstrate Meta’s commitment to this field.

The note also describes Meta’s significant revenue opportunities in GenAI. Raymond James estimates a potential run rate of $40 billion per year across five monetization methods.

These methods include the GenAI API, where companies pay for access to leverage Meta’s AI models. Meta can also provide cloud-based access to massive AI computing power through Infrastructure as a Service (IaaS).

Raymond James sees potential for AI-based solutions geared toward small and medium-sized businesses and AI applications in Meta’s wearable devices, such as smart glasses.

Raymond James emphasizes that Meta can pursue these GenAI opportunities without compromising its core social media business.