Late last month, new AI heavyweight OpenAI (PC:OPAIQ) launched Sora, an iOS video generator app powered by AI and positioned to take on TikTok, the popular Chinese short-form video app. Sora enables users to create AI-generated 10-second videos from text prompts, among other features.
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Sora Generates Buzz
Sora is based on Sora 2, the latest generation of OpenAI’s original video and audio generation model, which was first unwrapped in February 2024. Following its launch, Sora soared to the top of Apple’s (AAPL) App Store, toppling rivals, including Alphabet’s (GOOGL) AI chatbot Gemini and even OpenAI’s own ChatGPT chatbot.
While the app and its underlying model have raised several questions, including from Hollywood about the proliferation of deepfakes and copyright misuse, they have also raised investor concerns about their possible impact on rival social media apps, especially Meta’s (META) Instagram and Facebook, which also have video features.
Is Meta Up to the Challenge?
However, Cantor Fitzgerald’s five-star analyst Deepak Mathivanan believes there is no cause for concern, as Meta is up to the task. Mathivanan ranks 213 out of over 10,000 Wall Street analysts on TipRanks. He boasts of a 62% success rate and an average return of 19.80%.
According to the analyst, while the reception that trailed Sora 2 shows that generative AI video is gradually nearing mainstream acceptance, Meta has several “competitive” moats to win the gen AI video war: It has the talent, infrastructure, and a vast user base. Meta currently boasts over 3 billion users globally.
Can Meta Monetize AI-Generated Videos?
Furthermore, Mathivanan believes that Meta can deploy AI videos at scale inside its most popular apps, such as Facebook and Instagram. The analyst sees the company creating such an enabling platform for more than 200 million content creators on its platforms by the end of its Fiscal year 2028.
Similarly, Mathivanan argues that Meta has the capacity to profitably monetize AI-generated videos by the end of the same period, even as the current cost of operating graphics processing units to run AI models for the technology appears somewhat prohibitive for mainstream deployment.
Consequently, the Cantor Fitzgerald analyst rates META stock Overweight, raising his price target to $920.00, suggesting about 29% upside from the current level.
Is It Too Late to Buy Meta?
Across Wall Street, Meta’s shares currently enjoy a Strong Buy consensus rating, as seen on TipRanks. This is based on 41 Buys and six Sells issued by 47 Wall Street analysts over the past three months.
Moreover, the average META price target of $877.91 suggests a potential 23% increase from the current level.
