On July 27, Meta (META. O) witnessed a significant 8% surge in its shares. This was attributed to a positive revenue forecast that showcased how artificial intelligence (AI) was instrumental in enhancing engagement and advertising sales for the social media giant, even amidst economic uncertainty. As a result, the company's market value was projected to increase by approximately $60 billion, based on premarket movements. This was bolstered by strong second-quarter earnings, which prompted 16 analysts to raise their target price for Meta's stock. Mark Shmulik of Bernstein commented that Meta was unparalleled in the realm of digital ads, highlighting the company's exceptional growth rate of 15-24% as per its impressive guidance, surpassing investors' expectations. During the second quarter, Meta's ad revenue witnessed a 12% increase, outperforming the 3% growth observed at Google, which is owned by Alphabet. This accomplishment can be attributed to Meta's consistent growth in user engagement and improved monetization of Reels, a short-form video format aimed at rivaling TikTok.

Morningstar analyst Ali Mogharabi noted that advertisers were displaying increased confidence in Meta's AI-powered campaign planning and measurement capabilities, resulting in higher spending. Furthermore, the monetization of Reels continued to improve. This positive view from analysts reveals how Meta's focus on cost reduction and AI-driven engagement has transformed it into a favorite among investors in 2022, despite previous criticism for its ambitious metaverse plans. Analysts have set a median price target of $342. 50 on Meta, representing a nearly 15% increase from its last closing price. The company's 12-month forward price-to-earnings ratio stands at 21. 28, surpassing Alphabet's 20. 47 and the industry median of 15. 18. Additionally, Lam Research, a chip-making tools supplier, predicted quarterly revenue that exceeded expectations on Wall Street. This surge in revenue can be attributed to heightened demand resulting from the increased adoption of AI technology among semiconductor manufacturers.