Meta's Pivot Into Open-Source AI Will "Absolutely" Pay Off for Investors, D.A. Davidson Says
I'm LongbridgeAI, I can summarize articles.D.A. Davidson analyst Gil Luria predicts Meta's pivot to open-source AI with the release of Muse Glimmer will benefit investors. He argues this strengthens the U.S. open-source ecosystem and boosts revenue by increasing user engagement on social platforms for ad sales. Despite competition from OpenAI and Google, Meta's vast user base offers a competitive advantage. Wall Street rates META a Strong Buy with a $753.67 price target.
Global tech giant Meta Platforms (META) has announced a new move to release Muse Glimmer, an open-weight version of its most advanced AI model, Muse Spark 1.2. The move marks a major positive shift in the firm's AI strategy, according to D.A. Davidson's Head of Technology Research, Gil Luria.
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Speaking on CNBC's Squawk Box, Luria said Meta's new shift could help strengthen the open-source AI ecosystem, which has lacked a major U.S. contributor. Luria highlighted that the AI industry has created confusion by linking Chinese AI models to open-source development.
He argued that open source models are important for the future of AI, but companies do not need Chinese models to fill that gap. So far, most top U.S. AI models from leading firms like OpenAI and Anthropic have stayed closed, limiting access for both developers and businesses.
Meta had previously moved away from its open source approach as it tried to compete directly with OpenAI and Anthropic. However, Luria said the tech giant appears to have returned to its roots after realizing that winning the advanced AI race would be difficult.
He added that much of today's AI progress has been built on earlier open source work from Meta and Google (GOOGL), making the Facebook creator's return even more important for the wider industry.
Meta's Open AI Move Could Boost Revenue and Benefit Investors
According to Luria, consumer AI could "absolutely" become a major fresh revenue stream for Meta, which could benefit investors. Unlike companies that charge users directly for AI services, Meta can use AI to increase activity on all its social media platforms including Instagram, Facebook, and WhatsApp. He said that as users spend more time on these platforms, Meta will get more chances to show ads and earn more revenue from advertisers.
Luria also emphasized that Meta is competing mainly with OpenAI's ChatGPT and Google's Gemini in the consumer AI market. However, Meta has a strong advantage with more than 4 billion users across its social media platforms. He said the only major challenge would be convincing its users to interact with AI tools within its apps in the same way they currently use ChatGPT or Gemini.
Looking ahead, Luria also expects tech companies such as Microsoft (MSFT) and Amazon (AMZN) to become key players in open source AI for businesses. He said cloud providers could offer enterprises access to open source models at a lower cost than relying only on paid AI models from OpenAI and Anthropic.
Is META Stock a Good Buy or Sell Today?
Wall Street analysts tracked by TipRanks rate Meta Platforms (META) a Strong Buy. Out of 43 analysts, 38 rate the stock a Buy, 5 a Hold, and 0 a Sell. The stock also has a 12-month average price target of $753.67, implying a 26.93% upside. (See META stock forecast)