Meta introduces new ChatGPT competitor before important Q1 earnings report

ffectively its $60-65 billion investment in AI infrastructure is translating into growth. Analysts predict earnings per share of $5.21 on revenue of $41.2 billion, a 13% increase from a year ago. However, recent downward revisions suggest growing caution. Free cash flow is expected to drop by 31% to $8.6 billion due to a surge in capital expenditures. The termination of the ‘de minimis’ exemption on 2nd May, which has protected imports under $800 from duties, could increase costs for leading Chinese advertisers like Temu and Shein. This could impact advertising budgets and affect Meta’s bottom line later this year.

“Second-half visibility is murky, and the tariff shift may only amplify uncertainty,” stated CFRA’s Angelo Zino, who anticipates guidance to reflect a wider range of outcomes. However, some analysts believe that Meta’s size provides a buffer. “Meta is more resilient than peers,” claimed Baird’s Ted Mortonson, highlighting the company’s 3.4 billion monthly users. While Meta has surpassed EPS estimates for four consecutive quarters, its ability to monetize generative AI will be crucial in maintaining investor confidence. “Any concrete progress on AI monetization could lift the multiple,” suggested Morningstar’s Malik Ahmed Khan. With 88% of analysts rating it a buy and an average price target of $707, Wall Street remains optimistic – yet expectations are high.

The MetaLLAMA app, which is based on Meta’s Llama models, presents a direct challenge to OpenAI’s ChatGPT. The app boasts an AI assistant, image generation, and a ‘discover’ feed to exhibit user prompts, following the footsteps of recent releases from Google’s Gemini and xAI’s Grok. Meta’s release of the standalone AI app comes at a pivotal moment, just before the company’s quarterly earnings report. Despite Meta’s stated commitment to open-source technology, their Llama 4 generative AI model has faced criticism regarding its performance and allegations of benchmark manipulation. Co-founder of LM Arena, Ion Stoica, noted the importance of Meta being transparent about the differences in AI models released to the public.

Despite Meta’s optimistic projections about the widespread adoption of intelligent AI assistants in 2025, hesitancy among developers is emerging. Industry experts are closely monitoring Meta’s financial performance, with a focus on assessing the return on the company’s substantial investment in AI infrastructure. Analysts are predicting positive earnings per share and revenue growth, but recent adjustments to estimates indicate a level of caution among investors. Complicating matters further, changes in import tariffs may impact major Chinese advertisers and subsequently Meta’s financial outlook.

Analysts are divided regarding the future outlook for Meta, but many acknowledge the company’s resilience due to its large user base. As Meta’s financial results are scrutinized, the company’s ability to monetize generative AI technology will be a key factor in determining investor confidence. Despite existing confidence in Meta’s stock and future performance, the pressure is on for the company to deliver tangible progress in AI monetization in order to meet and potentially exceed market expectations. With high hopes for Meta’s future, analysts and investors alike are closely monitoring the company’s strategic movements and financial results.