Source: Davit Kirakosyan
Citi Remains Bullish on Meta Platforms
Citi, a leading global bank, continues to hold a bullish stance on Meta Platforms (NASDAQ:META), reinforcing its Buy rating and a $690 price target. This outlook follows Meta’s significant $14.3 billion investment into Scale AI, an artificial intelligence firm that has been making waves in the tech industry. The strategic deal awards Meta a substantial 49% stake in Scale AI, thus valifying the AI firm at a considerable $29 billion. This valuation is based on projections of 2026 revenues of around $4 billion, translating to a valuation that is roughly 7 times the enterprise value to sales.
Strengthening Commitment to AI Innovation
This strategic move by Meta reinforces the tech giant’s commitment to AI innovation. Meta is an industry leader in social media, with platforms such as Facebook, Instagram, and WhatsApp under its umbrella. Now, with this investment, the company is positioning itself to be a dominant player in the AI industry as well.
As part of the agreement, Scale AI’s CEO Alexandr Wang will be joining Meta’s newly formed superintelligence team, while also maintaining his position on Scale’s board. This move signifies a deepening partnership between the two firms and suggests a shared mission to advance AI technologies. Jason Droege, previously the Chief Strategy Officer, will step up to serve as interim CEO at Scale, ensuring a smooth transition of leadership.
Accelerating Development of Foundational AI Technologies
Meta’s investment is anticipated to fast-track its development of foundational AI technologies and large language models. This is particularly crucial as the company works to bring its next-generation Llama 4 model to market. The Llama 4 model is part of Meta’s broader revamp of its AI leadership and aligns with its ambition to create a foundational AI operating system.
This initiative signifies a major shift in Meta’s focus and strategy, revealing its intention to become a significant player in the realm of AI. The company’s vision is to move beyond being merely a social media conglomerate and transform into a leading tech company with AI at its core.
Meta Leading the AI Race
Citi sees Meta as being well-positioned to lead in the AI race, especially with over a billion monthly active users for Meta AI. The enhanced recommendation systems and improving engagement and conversion rates further strengthen this view. The partnership with Scale AI is seen as a strategic lever that could significantly amplify Meta’s long-term capabilities in the space.
The partnership with Scale AI is not just a financial investment, but a strategic move that could reshape the AI landscape. Scale AI has a strong track record in providing data annotation services, which are crucial in training AI models. This collaboration could potentially give Meta an edge in the development of AI technologies, especially those related to language processing and understanding.
Conclusion
In conclusion, the recent investment by Meta in Scale AI reaffirms the tech giant’s commitment to AI innovation. This strategic partnership is expected to accelerate the development of foundational AI technologies, while also potentially reshaping the AI landscape. With a bullish stance from Citi, investors will be eagerly watching Meta’s progress in the coming months.