Meta Platforms, Inc. (META) stock forecast and price target

The growth prospects for the artificial intelligence (AI) universe are impressive, yet hard to determine. Argus has derived a model of the size and scope of the global AI industry, based on our coverage of the major publicly-traded players and most of the mid-tier players, along with our industry analysts' knowledge of private players. We estimate the global AI industry amounted to about $90-$100 billion in 2021, and expect it to grow at a 40% CAGR through 2030, when it is expected to reach $1.8 trillion in annual revenue. We expect annual growth to decelerate from the low- to mid-40% range in immediate years to the mid-30% range for years toward the end of the survey period. But determining a realistic estimate for the size of the industry is a challenge. Even for an industry that promises to redefine measuring tools, there is no measurable unit of AI output comparable to barrels of oil or tons of steel. As well, much of AI development occurs within labs and at universities, and the output is measured in tangible progress against objectives, not dollars or units of output. In the corporate world, nearly all the AI pure-play companies service micro-niches, have little measurable revenue, and are deeply unprofitable. For our list this week, we take a big picture view of three areas where AI applications are developing. In Big Tech, we believe much of the revenue and most of the profitability from AI is attributable to several giant U.S. and a few international companies that operate primarily in growth sectors such as Technology, Communication Services, and Consumer Discretionary. Next, we note that China is also a hub of AI development, with companies like Alibaba, Baidu, and Tencent (though Argus follows only Alibaba). Finally, Niche Tech has significant AI activity among companies pursuing advances in IoT, vehicle electrification, autonomous driving, automation and connectivity solutions for manufacturing, warehousing, construction, and other areas. Here are featured companies followed by Argus in those three categories.

When looking at insider-sentiment data from Vickers Stock Research over the past few weeks, the significant talking point has been Vickers' one-week sell/buy ratio for stocks that trade on the Nasdaq. While Vickers' other indicators generally were in keeping with historical standards during earnings season, the sell/buy ratio for the Nasdaq bearishly skyrocketed three weeks ago to 13.20 (on a scale where a reading above 2.50 is bearish). Last week, the ratio improved significantly, but at 7.51 was still uncomfortably high. This week, the ratio is 6.68 and again has improved but again has more wood to chop. But the trend is positive -- and that trend, along with other sentiment barometers that are of little concern, has resulted in a stabilization in overall insider sentiment.

Stocks rose on Wednesday morning following positive inflation data. The Labor Department said that its all-items consumer price index rose 3.0% from the prior year in June, down from a 4.0% increase in May and below the Reuters consensus of 3.1% growth. The core CPI, excluding food and energy, rose 4.8% from the prior year, also slowing from 5.3% in May and below the consensus forecast. The Dow rose 0.8%, the S&P 1.0%, and the Nasdaq 1.4%. Crude oil rose $1 to $76 per barrel, while gold jumped $24 to $1962 per ounce.

We read two statements over the weekend that say it all. First up was this. "Positive earnings surprises of this magnitude are rarely seen when you enter a recession." That compared to this. "Forecasted probability of recession at levels only seen during recessions." Yes, these are confusing times.

Innovation may be hard to define but, to borrow from former U.S. Supreme Court Justice Potter Stewart, you know it when you see it. The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles, to a large degree - have moved overseas, where costs are lower. Yet the U.S. economy is at its largest point in history and still growing. If U.S. corporations weren't innovating, creating new products and services, and moving into new markets and applications, the domestic economy would be contracting, not expanding, and capital would not be flooding into the country. Particularly at this juncture of the market and economic cycles, when uncertainty is high due to high inflation and rising interest rates, we look to innovative companies to successfully navigate the challenges. At Argus, an 88-year-old independent research firm that has innovated a time or two in its long history, we have focused on four types of innovative companies: Industry Disruptors; First to Market; New Product Specialists; and Product & Process Perfectors. Here are some examples of companies, featured in our Innovation Theme Model Portfolio.

Stocks rose modestly on Friday morning, extending Thursday's rally. Exxon shares rose after the company reported strong 1Q earnings that topped the consensus forecast, though sales were down from the prior year. Chevron also posted strong earnings, helped by growth in its refining business. Amazon shares fell, despite strong first-quarter results, on concerns about slowing growth in the company's cloud business. The Dow rose 0.5%, the S&P 0.5%, and the Nasdaq 0.2%. Crude oil rose more than 2% to $76.50 per barrel, while gold traded near $1999 per ounce.

Innovation may be hard to define. But to borrow from former U.S. Supreme Court Justice Potter Stewart, you know it when you see it. The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles to a large degree - have moved overseas, where labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services (such as Zoom calls) and moving into new markets and applications, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

The current advance by the large-cap indices has occurred because of some very nice gains in the mega-cap stocks, that within the context of an overall neutral-to-poor period of market breadth. Over the past six months (since the start of October) as well as year-to-date, the leaderboard is littered with mega-caps, mostly from the Technology sector. At the same time, the Nasdaq 100 advance-decline line has improved -- but remains range bound. Interestingly, we heard the same complaint in the late 1990s -- which was a pretty good time for the QQQs and the S&P 500.

In 1Q23, stocks continued to recover from the bear-market lows of 2022, with the S&P 500 rising 7% for the quarter. Performance was led by last year's laggard sectors, including Communication Services and Technology. Last year's top-performing sector, Energy, was the worst in 1Q23. Financial Services, including banks, were not far ahead. The average stock in the Argus Universe of Coverage rose 4% in the quarter; the median stock advanced 2%. The average BUY-rated stock rose 5.4% and the average HOLD-rated stock gained 3.4%. Recently, we raised our sector rating on Technology to Over-Weight, and expect outperformance into 2Q -- especially if interest rates head lower. We also raised our rating on Financial Services, and the bottom five stocks in our list point to potential value opportunities.

The stock market held up again last week, despite additional bearish news about the global banking system. This time, Europe imploded (after already having booked a nasty decline). Indeed, once contagion starts, it generally does not stop on a dime -- but rather continues down an increasingly negative path.

Vickers Stock Research, a subsidiary of The Argus Research Group, tracks and analyzes insider trading and institutional stock ownership trends. Form 13-Fs, which institutions must file to report their holdings, are due 45 days after the end of calendar quarters, and have now come in for 4Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others, in order to determine their core holdings and new purchases. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Activists have made progress in the past quarter with high-profile investments into blue-chip companies such as Walt Disney and Salesforce. Based on data from Vickers, here are some recent new purchases and key holdings of activist investors, as well as other high-profile money managers such as Warren Buffet of Berkshire Hathaway and Ken Griffin of Citadel Advisors LLC.

Stocks extended their Fed-driven rally on Thursday, led by strong gains in the Communication Services, Consumer Discretionary, and Technology sectors. Meta Platforms jumped 23%, despite disappointing 4Q earnings, as investors focused on the company's better-than-expected revenue, cost-cutting efforts, and new share buyback plan. On the employment front, first-time claims for state unemployment benefits fell by 3,000 to 183,000 for the week ended January 28, below the Reuters consensus forecast of 200,000. The data came ahead of the government's January employment report on Friday morning. The consensus estimate calls for 185,000 new payroll jobs, down from 223,000 in December, and an unemployment rate of 3.6%, up from 3.5% a month earlier. The Dow fell 0.11%, the S&P rose 1.47%, and the Nasdaq soared 3.25%. Crude oil traded near $76 per barrel, while gold fell $16 to $1927 per ounce.

Stocks rose slightly on Thursday after the Consumer Price Index for December rose 6.5% in prices year-over-year but fell 0.1% sequentially, which was in line with expectations. Initial jobless claims fell by 1,000 to a seasonally adjusted 205,000 last week. Employers added 223,000 jobs in December. Industries trading higher included airlines, construction & engineering and energy. American Airlines rose more than 9% after reporting preliminary 4Q estimates that were considerably higher than expected. The Nasdaq closed up 0.6%, the S&P 0.3%, and the Dow Jones closed up 0.6%. Crude oil is trading above $78 per barrel, while gold rose $16 to $1895 per ounce.

Monday Tee Up: The Fed, Jobs, Earnings Roll On

Stocks recovered from early losses on Thursday, rallying strongly despite disappointing inflation data. The 6.6% increase in the core consumer price index, excluding food and energy, marked a 40-year high and set the stage for another 75-basis-point rate hike at the Fed's next meeting. On the employment front, first-time claims for state unemployment benefits rose by 9,000 to 228,000 for the week ended October 8, slightly above the Reuters consensus estimate. The Dow rose 2.83%, the S&P 2.60%, and the Nasdaq 2.23%. Crude oil rose more than 2% to $89 per barrel, while gold fell $4 to $1673 per ounce.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes trends in insider trading and institutional ownership. Form 13Fs are due 45 days after the end of calendar quarters and have now come in from 2Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others, in order to determine their core holdings and new purchases. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Here are some recent new purchases and key holdings of Activist investors, according to Vickers.

Monday Tee-Up: No Summer Doldrums on Wall Street

Stocks plunged on Friday morning on further signs of accelerating inflation and concerns about the Fed's response. In a widely anticipated release, the Labor Department said that consumer prices rose at an 8.6% annual rate in May, up from 8.3% growth in April and above the consensus forecast of 8.3%. The reading was the highest in more than 40 years. The core CPI, excluding food and energy, rose 6.0% from the prior year, above the consensus of 5.9% growth. The Dow fell 2.1%, the S&P 2.5%, and the Nasdaq 3.1%. Crude oil fell to $121 per barrel, while gold traded near $1851 per ounce.

In this edition, advertisers give Meta a like, we look at the power behind European utilities, and we follow the thread of re-selling in retail fashion; and James Hardie, Applied Materials, and Daifuku.

Yikes. It looked like it could be a very bad start to May, but a mid-afternoon rally on Monday (led by Communication Services, Energy, and Technology) saved the stock market. Talk about a great save -- and just as time was running out, with the major indices below their corrective and bear-market lows. Let's take a step back.

The stock market opens Monday looking for a fresh start in May and any crumbs of positive news. The big event of the week is on Wednesday when the Federal Reserve announces its next monetary policy move. Most economists see that move as a 50-basis-point rate hike. Over the weekend, Berkshire Hathaway reported earnings and hosted its annual meeting with famed CEO Warren Buffett. More big earnings and economic reports are coming this week, including the jobs report for April. More than 1,600 public companies will report on their last quarter. The range and number of companies will give more data points on how different sectors are weathering the many external factors out there pressuring valuations, including - the war in Ukraine, inflation, and rising interest rates. The stock market carnage in April was swift, decisive, and severe. The Nasdaq now has lost all gains since 2008. The Dow and S&P are at their lowest levels since March 2020. In April, the Dow Jones Industrial average dropped -4.9%, the S&P 500 fell -8.8%, with the Nasdaq Composite again hit hardest losing -13%. Year-to-date the Dow is down -9.3%, the S&P 500 is further in correction territory, off -13.3%, and the Nasdaq is in bear territory, down -21.2%. Breaking down the sectors, only two of the eleven broad S&P categories are in the green for 2022. Here are the results so far year-to-date: Basic Materials -6%, Energy +35%, Healthcare -8%, Industrials -10%, Consumer Staples +0.7%, Utilities -0.5%, Financials -12%, Communication Services -26%, Information Technology -19%, Real Estate -10%, Consumer Discretionary -21%. It's been a rough start to 2022.

Stocks plunged on Thursday amid weak earnings and disappointing guidance from Facebook owner Meta Platforms, which warned of increased competition and a substantial revenue hit from Apple's new advertising tracking policy. FB shares fell more than 26%. On the employment front, first-time jobless claims fell to 238,000 for the week ended January 29, down from 261,000 a week earlier and below the consensus forecast of 245,000. Continuing claims fell to 1.628 million, down from the prior week but slightly above consensus. The Dow fell 1.45%, the S&P 2.44%, and the Nasdaq 3.74%. Crude oil traded near $90 per barrel, while gold rose $2 to $1806 per ounce.

We are raising our intermediate-term technical outlook to neutral from bearish. The market has come roaring back after a week of panic and indiscriminate selling. While we were disappointed with market breadth on Friday, it was strong on Monday. The S&P 500 rose another 1.9%, for a two-day spike of 4.4%, the biggest two-day gain since April 2020 when we were coming out of the pandemic low. The Nasdaq spiked 3.4% for a two-day surge of 6.6%, while the Nasdaq 100 (QQQ) has screamed higher by 6.4% on a two-day basis. These are the biggest returns for both indices since November of 2020.

In 2021, several major corporations announced that they were splitting into pieces, and we don't think the dismantling of conglomerates has run its course. Last year, industrial icon General Electric decided to split into three companies, with one focused on Aerospace, one on Healthcare, and one on Power/Energy. Pharmaceutical titan Johnson & Johnson also announced it is planning to carve off its consumer division and focus just on drugs and devices. These companies, which took generations to build, have abruptly concluded that their best growth opportunities exist for them as smaller, more-nimble, and more-focused companies. Former conglomerate United Technologies blazed this trail in 2020. UTX, now Raytheon Technologies, or RTX, is now three listed firms, with focuses on Aerospace, HVAC and Elevators. This split-up has most favored the HVAC company Carrier Global Holdings Corp. (CARR), which has risen more than 200%. The other businesses are only slightly trailing the broad market. We think investors can benefit from these transactions if they look closely at the resulting companies and focus on the balance sheet, management, and earnings transparency. Companies that potentially fit this theme for 2022 include the following.

While stocks have fallen since the start of 2022, current insider sentiment remains reassuringly benign. Indeed, the overall Insider Index from Vickers Stock Research is resting at its most-attractive level since November 2020. As expected now that earnings season is in full swing, insider trading volume has dropped from recent robust levels, with only 856 insider transactions meeting the criteria this week for inclusion in Vickers' Weekly Insider Report.

The stock market moved higher last week during the busiest days of earnings season. Tech stocks far outperformed blue chips, though a portion of the outperformance was attributable to Tesla, as its stock is included in the S&P 500 and Nasdaq Composite, but not the DJIA. During Friday's session, the Dow Jones Industrial Average increased 89 points, or 0.25%. The S&P 500 was up 0.19%, and the Nasdaq Composite was up 0.33%. For the week, the DJIA was up 143 points, or 0.40%, the S&P 500 was up 1.33%, and the Nasdaq Composite was up 2.70%. For the YTD, the DJIA is up 17.03%, the S&P 500 is up 22.61%, and the Nasdaq Composite is up 20.25%.

This edition features the U.S. gas market; the recovering airline industry; new coverage of equipment rental firms; and notes from Meta Platforms (better known as Facebook), Apple, and Amazon.

What happened to the September sell-off? A month ago, the S&P 500 was in the process of falling off all-time highs (ATHs) set early in September. From the ATH of 4,537 on 9/2/21, the '500' fell to the 4,350s on 9/21/21; staged what would be a failed rally to just under 4,450 on 9/24/21; and then made twin lows right around 4,300 on 9/30/21 and 10/4/21.

The stock market performed well last week despite opening Monday on a bad note. Blue chips outperformed tech stocks by a slim margin during a week that featured FOMC commentary. During Friday's session, the Dow Jones Industrial Average increased 33 points, or 0.10%. The S&P 500 was up 0.15%, and the Nasdaq Composite was down 0.03%. For the week, the DJIA was up 213 points, or 0.62%, the S&P 500 was up 0.51%, and the Nasdaq Composite was up 0.02%. Year-to-date, the DJIA is up 13.69%, the S&P 500 is up 18.62%, and the Nasdaq Composite is up 16.75%.

This edition features digital adversiting and regulatory risk; our quarterly telecom outlook; new coverage of backup power leader Generac; and notes from Continental, Goldman Sachs, and Boston Beer.

The stock market was flat to down last week as positive earnings surprises proved to be baked-in. Tech stocks modestly underperformed blue chips. During Friday's session, the Dow Jones Industrial Average fell 149 points, or 0.42%. The S&P 500 was down 0.54%, and the Nasdaq Composite was down 0.71%. For the week, the DJIA was down 126 points, or 0.36%, the S&P 500 was down 0.37%, and the Nasdaq Composite was down 1.11%. Year-to-date, the DJIA is up 14.14%, the S&P 500 is up 17.02%, and the Nasdaq Composite is up 13.85%.

This edition features opportunities in electric vehicles; our quarterly market outlook; an examination of ViacomCBS' streaming capabilities; and updates on Facebook, Tesla, and Darden.

Investors have enjoyed a bouyant first half, but should note that the markets are entering the poorest performing quarter of the year. By our calculations, 3Q performance has been underwhelming compared to 1Q, 2Q, and 4Q returns. We analyzed data collected on S&P 500 performance from 1980-2018. The strongest quarter has been 4Q, which has generated average gains of 4.4%. 1Q and 2Q returns have averaged 2.1% and 3.2%, respectively. On the other hand, 3Q is barely positive, with an average return of 0.5%. Not every 3Q is a disaster. In fact, the "win percentage" for the quarter is 63%; this means that markets deliver positive returns in the quarter more than three-fifths of the time. But the actual quarters that are negative can really hurt: -12% in 1981, - 15% in 1990, - 15% in 2000, - 18% in 2001, -14% in 2008 and -14% in 2011. Some of the events that occurred in these quarters are random: the September 11 attacks in 2001; the Lehman bankruptcy in 2008; and the S&P U.S. Treasury downgrade in 2011. But 3Q is also when companies start to know if they are going to meet their estimates for the year. As well, the Federal Reserve can be active. We think the current fundamentals are positive for stocks as 3Q21 begins, but will be watching closely for emerging risks, especially after the 8.1% return for stocks in 2Q19.

The market prospered in June, partly because of the strong (but not too strong) May payrolls report and the FOMC post-meeting commentary that confirmed the Fed is on track with its lower-for-longer approach to short-term rates.

Stocks kept the momentum going in April, and are now up almost 12%, including dividends, in the year-to-date. Our analysts have been progressing through earnings season, and have come across many stocks in coverage that have approached target prices. We set target prices through our valuation framework, which includes analysis of historical multiples, peer multiples, future dividends, and cash flows. After adjusting the models for the latest earnings and dividend information -- most of which has been good -- here are some of the stocks on which we have raised target prices over the past month. All stocks are rated BUY at Argus.

The stock market was flat to down last week. Tech stocks and blue chips performed similarly, with tech narrowly outperforming. During Friday's session, the Dow Jones Industrial Average fell 186 points, or 0.54%. The S&P 500 was down 0.72%, and the Nasdaq Composite was down 0.85%. For the week, the DJIA was down 169 points, or 0.50%, the S&P 500 was up 0.02%, and the Nasdaq Composite was down 0.39%. Year-to-date, the DJIA is up 10.68%, the S&P 500 is up 11.32%, and the Nasdaq Composite is up 8.34%.

Sustainable Impact Investing is gaining traction with the global investment community. In January 2020, BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. But the performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as the climate, hunger, poverty, disease, shelter, and workers' rights.

Stocks edged lower on Wednesday morning ahead of the release of the Fed's latest meeting minutes, which could provide clues about the timing of future interest rate hikes and the pace of the Fed's bond buying program. The Commerce Department reported that the U.S. trade deficit rose 4.8% to a record $71.1 billion in February as exports declined at a faster rate than imports. The deficit was greater than the Reuters consensus forecast of $70.5 billion. The Dow fell 0.2%, the S&P 0.1%, and the Nasdaq 0.2%. Crude oil traded near $59 per barrel, while gold fell slightly to $1741 per ounce.

We recently raised our rating on the Communication Services sector to Over-Weight. In this barbell sector, media and entertainment companies should benefit from robust online activity and the reopening of theme parks and movie theaters. Providers of telecom services should benefit from ARPU gains as the 5G rollout gains traction. The style mix of the sector is approximately one-third value and two-thirds growth. The adjusted pro-forma beta is approximately 1.1 (like the old telecoms), while the yield is 0.9% (reflecting the impact of Google and Facebook). The smoothed growth rate is 7% and the P/E ratio is 21x. The sector accounts for 11% of the S&P 500. We think investors should consider allocating 12%-14% of diversified portfolios to the sector. Here are some of our top picks.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

There are now more than 80 million Millennials, born between 1982 and 2000 and ranging in age from their early 20s to their late-30s. This generation is the largest in history - bigger than even the Baby Boomers. Yet despite their size, and according to our research, Millennials currently account for 25% of total U.S income - some $3.1 trillion in direct annual purchasing power. Millennials are already coveted by marketers, even though their annual average income is 40% below the spending levels of the generation ahead of them (Gen X) and 30% below the spending levels of Baby Boomers, who are slowing down. But as Millennials rise into their peak earning years, their earnings are expected to grow.

The major indices fell on Friday morning amid continued volatility in heavily shorted stocks and new COVID-19 vaccine trial results from Johnson & Johnson. J&J said that its vaccine candidate was 66% effective in preventing the spread of the virus globally (72% in the U.S.), well below the high bar set by the Pfizer/BioNTech and Moderna vaccines. However, the lower efficacy may reflect the increased prevalence of new variants of the virus during the J&J trial. On the positive side, J&J said that the vaccine was 85% effective in preventing severe cases of the disease 28 days after vaccination and 100% effective in preventing hospitalization. The Dow fell 1.3%, the S&P 1.3%, and the Nasdaq 1.2%. Crude oil traded near $53 per barrel, while gold rose $20 to $1861 per ounce.