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During its Connect 2024 event that took place on Wednesday, Meta Platforms (META) unveiled its new low-cost mixed reality headset Quest 3S, introduced its prototype AR glasses Orion, and presented its new Llama 3.2 models. Wall Street welcomed the new updates on Meta AI, as well as the company's VR and AR announcements, with several firms upping their price targets on the shares and some telling investors they are now "more bullish" on the AI opportunities.

CONNECT 2024: During its Connect 2024 event, Meta unveiled Meta Quest 3S, a headset with the same mixed reality capabilities and fast performance as Meta Quest 3, but at a lower price point, starting at $299.99. Preorders were available as of September 25 and expected to start shipping on October 15. In addition to the new budget-friendly Meta Quest 3S headset, Meta is also dropping the price of the 512GB Meta Quest 3 from $649.99 to $499.99.
Additionally, the company introduced the newly opened source Llama 3.2 with new multimodal features. Users can now use their voice to talk to Meta AI on Messenger, Facebook, WhatsApp and Instagram DM, and it'll respond back out loud. Users can also now share photos in chats with Meta AI, and Meta AI can understand what it's looking at and answer questions about it. Meta is also testing a Meta AI translation tool that will automatically translate the audio of Reels.

Meta is adding new AI features to Ray-Ban Meta glasses to help users remember things like where they parked, translate speech in real time, and more. The company is also advancing partnerships with Spotify (SPOT) and Amazon Music (AMZN) and adding new ones with Audible and iHeart (IHRT) to give you more ways to listen.

During the event, the company also introduced Orion, previously codenamed Project Nazare, which the company believes is "the most advanced pair of AR glasses ever made." "They enable digital experiences that are unconstrained by the limits of a smartphone screen. With large holographic displays, you can use the physical world as your canvas, placing 2D and 3D content and experiences anywhere you want," Meta says.

MORE BULLISH ON META AI: After Mark Zuckerberg showcased Meta's AI future at Meta Connect, Jefferies says the keynote leaves the firm "more bullish" on Meta's consumer and enterprise AI opportunities. On the consumer, Jefferies is bullish on Meta AI's impressive traction, with about 500M monthly actives, and sees potential for new image, translation and voice capabilities to boost core engagement. On the enterprise side, Llama is "becoming a serious contender" and the firm sees momentum building with its new multimodal capabilities, calling Meta "one of our top AI picks." The firm keeps a Buy rating and $600 price target on Meta shares.

Keeping a Buy rating on the name, Citi said that Meta's new artificial intelligence products, features, and devices make the firm "incrementally confident" that the company's product innovation can deliver increased engagement and monetization as the return from investment from its AI investments continues to expand. Citi points out Meta's AI is increasing functionality around voice, translations, and video as AI agents are now more interactive. The firm views Meta's updated Ray-Ban Meta Smart Glasses as a "must buy" that can lead to greater overall engagement across Meta. The stock remains Citi's top pick across the internet sector.

Voicing a similar opinion, Wedbush said it thinks Meta is making encouraging progress along its AI product roadmap with Meta AI on track to become the most used AI assistant globally by the end of this year. Meta's Reality Labs investments are an area of investor debate, with the unit generating -$16.7B of operating losses over the past twelve months. That said, Wedbush thinks Reality Labs investments are becoming more synergistic with the core business as AI becomes a more central component of existing and upcoming hardware products. New products within the Quest 3 family and upcoming AR hardware like Orion present significant optionality for Meta as the company looks to build next generation computing platforms at scale, the firm adds. Wedbush has an Outperform rating on the shares with a price target of $600.

TARGET RAISES: JPMorgan raised the firm's price target on Meta Platforms to $640 from $610, while keeping an Overweight rating on the shares. The firm says the company's Meta Connect conference highlighted continued progress across its artificial intelligence ambitions, which are driving early returns through core product enhancements around content and ads, new products such as Meta AI, and the Metaverse. JPMorgan continues to believe Meta "has earned the right to spend big" on AI with strong core operating results, early AI benefits in both engagement and monetization, and increasing clarity on the AI product roadmap.

JMP Securities, BofA, Baird, and Rosenblatt also increased their price targets on the stock following Meta Connect 2024.

PEAK LOSS MARGINS: Roth MKM analyst Rohit Kulkarni keeps a Buy rating and $550 price target on Meta Platforms after attending the company's Connect conference keynote by CEO Zuckerberg. The key event was marked by Zuckerberg showing off AR prototype glasses after working on them for 10 years, and with 50% of Reality Labs' spend having been earmarked to AR, the next couple of years could see slower growth in incremental spend, the firm tells investors in a research note. Roth further notes that 2024 could also mark a "peak" segment operating loss margin year for Reality Labs.

PRICE ACTION: In Thursday afternoon trading, shares of Meta have dropped about 1% to $563.36.

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