Evercore ISI reiterates Meta stock Outperform rating on AI models

Evercore ISI has maintained an Outperform rating and set a $860 price target for Meta Platforms Inc. (META) after the company unveiled new AI models, Muse Wonder and Muse Wonder Full. These models are designed for complex, extended tasks rather than simple question answering. The launch comes after a 14-month overhaul of Meta's AI efforts, driven by significant acquisitions.

Muse Wonder is accessible through the Meta Model API and Muse Code, while Muse Wonder Full is reserved for Muse Code subscribers. The rollout into the consumer Muse experience will begin with paid subscribers. The $860 target represents a 22x 2028 price-to-earnings ratio and a 16% upside from the current stock price. META is currently trading at a P/E of 28.01, with a market cap of $1.89 trillion.

According to InvestingPro, META appears overvalued, being part of the Most Overvalued list. The stock's impressive gross profit margins of 81.75% offer financial flexibility to support AI initiatives. Analysts at Wells Fargo and Piper Sandler have also raised their price targets and forecasted strong revenue growth for META in the upcoming quarters.