$30B AI Opportunity: Will It Power Meta’s Next Surge?

Written by Leo Miller

Magnificent Seven giant Meta Platforms (NASDAQ: META) has been no stranger to Wall Street analyst upgrades lately. After the company’s last earnings report, nearly 20 analysts tracked by MarketBeat increased their price targets on the stock.

More recently, analysts at Wolfe Research issued a substantial price target update on Meta of $750. This implies a significant potential upside in Meta shares of nearly 18% from its May 20 closing price.

Mark Zuckerberg recently shared five key AI growth opportunities for the company. This makes an earlier piece of Wolfe’s research particularly relevant. Wolfe has referenced the huge growth potential of one opportunity that Zuckerberg mentioned: business messaging. It sees business messaging as a possible $30–$40 billion opportunity for Meta.

Zuckerberg’s recent comments suggest that business messaging might help Meta hit Wolfe’s $750 12-month price target. This analysis will break down Meta’s ambitions in business messaging and show just how powerful they could be for the tech stock.

Over a Third of the World Population Is Using WhatsApp

Aside from Facebook and Instagram, Meta also owns possibly the world’s most-used direct messaging app, WhatsApp. In Meta’s Q1 2025 earnings call, Zuckerberg stated that WhatsApp has over 3 billion monthly active users. That is equal to around 38% of the world’s population of 8 billion. Zuckerberg also said that more than one billion people use Facebook Messenger every month.

Additionally, users send just as many messages on Instagram each day as they do on Messenger. He summed up this massive user count and activity data by saying, “So, Business messaging should be the next pillar of our business.”

It looks like Meta is gearing up to start aggressively monetizing its huge messaging user base. This could kick off the path toward Meta executing on Wolfe’s massive total addressable market revenue estimates in this space. Wolfe estimates that Meta is only generating around $1.5 billion to $2 billion in annual revenue from WhatsApp. That lines up with Meta’s latest earnings. Meta’s Other Family of Apps Revenue, which houses WhatsApp, generated around $1.8 billion over the last 12 months. It also generated $510 million in revenue last quarter, growing by 34% from a year ago.

Wolfe’s Estimates Indicate a Huge Opportunity for Meta

Although the timeline around which Wolfe sees Meta achieving $30–$40 billion in business messaging revenue is uncertain, it could clearly be a huge growth driver for Meta. At the midpoints of Wolfe’s estimates, this would mean a 20x increase in Meta’s business messaging revenue. Additionally, $35 billion in business messaging revenue would be equal to over 20% of the $170 billion that Meta generated in the last 12 months.

Meta intends to increase the monetization of business messaging using AI. Zuckerberg envisions every company using an “AI business agent.” This agent handles customer service and runs sales campaigns through direct messaging. Meta would then presumably charge companies to do this through its messaging apps.

Meta has already seen companies in Thailand and Vietnam using its messaging apps to aid their business. However, they use humans to do so because the cost of labor in those countries is low. The company believes that the use of AI agents can make doing this profitable in developed countries.

However, Meta’s focus on monetizing AI in developed countries is somewhat curious. Only around 100 million of WhatsApp’s 3 billion monthly active users are in the United States. Additionally, data shows that most WhatsApp users are in emerging economies. If these economies already have low labor costs, will AI agents really change the adoption of business messaging? While they might not make a difference in whether business messaging is profitable overall in these countries, there is a solid chance they could raise profitability, thus increasing adoption. This remains to be seen, as Meta is currently testing these AI features. Additionally, an amount of 100 million users is still around 30% of the population in the United States, meaning there is a big opportunity at home as well.

With Proper Execution, Business Messaging Could Be Meta’s Next Big Hit

Overall, Meta’s business messaging ambitions should be a key area of focus for investors going forward. However, it seems reasonable to pump the brakes on Wolfe’s huge forecasts in this area until more tangible results for Meta’s AI agents surface. If successful, business messaging represents a huge possible growth opportunity for one of the most dominant technology names in the world.

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Microsoft Could Rally as EU Antitrust Case Nears Resolution

Written by Chris Markoch

It didn’t really need much boosting, but Microsoft Corporation (NASDAQ: MSFT) stock got more good news in a week when the market is looking for direction. The latest catalyst for the stock is news that the company is likely to avoid fines from the European Union’s (EU) antitrust case regarding Microsoft Teams.

At issue were allegations that Microsoft had abused its market dominance by incorporating Microsoft Teams into its Office suite, which includes signature applications such as Word, Excel, and Outlook. Microsoft has proposed offering the Office suite without Teams at a lower price than when Teams is included.

In a blog post, Microsoft VP for European Government Affairs Nanna-Louise Linde described the proposal as a “clear and complete resolution” to its rivals’ concerns and that Europeans would have more choice. However, the EU says it will seek feedback from Microsoft rivals and customers before deciding whether to accept the offer. Interested parties have a month to provide feedback.

The First Successful Attack on Microsoft’s Walled Garden?

This case has been ongoing since 2020, so it’s not top-of-mind for many investors. However, lawsuits of any duration can weigh on earnings expectations. Microsoft has already paid the EU more than 2 billion euros, or roughly $2.67 billion, over the past several years. So at a time when earnings may be under pressure, it’s good for Microsoft to put this case behind it.

That’s why, based on the headline proposal alone, it’s reasonable to wonder why this should take so long. The price difference between the two suites is 8 euros, or about $9. While the headline draws attention, it’s the details that make the story more compelling.

Under Microsoft’s proposal, competitors would be able to interoperate with certain Microsoft products and services for specific functions. They would also be able to embed Office applications (e.g., Word, Excel, PowerPoint) in their own products and integrate their products into Microsoft’s productivity applications.

That’s significant because the Windows operating system dominates the market and has increasingly drawn the ire of competitors for creating a “walled garden” effect because it lacks open communication with other platforms.

This reputation has been amplified with the introduction of Teams and, more recently, its AI initiatives with OpenAI. The deal with the EU, which would span 10 years, is one step toward, perhaps, a more open and inviting Office suite.

Does MSFT Stock Have Short-Term Momentum?

Like many technology stocks, Microsoft stock gapped up sharply after its earnings report on May 1. However, the stock was already off the 52-week low it made in March and April. Microsoft has been experiencing positive momentum as analysts are bullish about the company’s strategic investments in AI and cloud computing.

However, naysayers believe much of that growth is priced in, and MSFT stock is headed back to its April lows. The fact that the stock is trading at overbought levels reinforces that. A pullback on May 21 stopped its move to the all-time high it made last summer. It may also end a seven-day win streak and break the stock’s momentum.

Further support for a move lower is the stock’s P/E ratio around 36x, which is a slight premium to its historical average. Also, Microsoft’s estimated earnings per share (EPS) growth of 11.35% is below its three-year average of 15.9%. From a technical standpoint, the move lower on May 21 dropped the stock below its 50- and 200-day simple moving averages, which may be a sign that a reversal is in place.

While short-term volatility exists, Microsoft’s strong fundamentals and market position suggest a favorable outlook for investors. Analysts continue to bid the stock higher. The Microsoft analyst forecasts on MarketBeat give MSFT stock a Moderate Buy rating with a $512.63 price target that marks a 13% upside from its price on May 21.

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Intel Refocuses: NEX Sale and Foundry Pivot Signal New Era

Written by Jeffrey Neal Johnson

Recent developments at Intel Corporation (NASDAQ: INTC) suggest a quickening pace in its strategic overhaul under new CEO Lip-Bu Tan. Reports emerging around May 20, 2025, indicate the semiconductor sector giant may be actively exploring a sale of its Networking and Edge (NEX) business unit.

This news closely followed comments from Intel’s Chief Financial Officer, Dave Zinsner, around May 13th, who publicly reaffirmed the company’s confidence in its Intel Foundry Services (IFS) division, reiterating a target for the unit to achieve break-even status by 2027.

Taken together, these signals point towards a concerted effort by Tan, who assumed leadership in March 2025, to streamline the company’s vast operations, sharpen its focus on core high-growth areas, and solidify the foundations for its ambitious long-term manufacturing and product strategies.

These moves unfold against a backdrop of continued market scrutiny, inviting a closer look at whether these deliberate strategic actions could pave the way for a more robust turnaround than currently reflected in investor sentiment.

Trimming the Fat? The Rationale Behind Intel’s Potential Sale

The exploration of a sale for Intel’s Networking and Edge (NEX) unit represents a significant potential step in CEO Lip-Bu Tan’s efforts to simplify the company and hone its strategic priorities. The NEX division, which encompasses a range of hardware and software platforms for network infrastructure and edge computing, generated substantial revenue of $5.8 billion in 2024, accompanied by an operating income of $931 million.

However, its growth trajectory has been modest in the recent past, with 2024 revenue only slightly up from 2023 and notably down from its $8.4 billion peak in 2022. Intel had already signaled a shift in how NEX fits into its broader structure by integrating its financial reporting into the PC and Data Center segments starting in the first quarter of 2025.

A divestiture of NEX would align squarely with Tan’s stated intentions to concentrate Intel’s considerable resources on its foundational PC and Data Center chip businesses, alongside the critically important, though currently capital-intensive, Intel Foundry Services (IFS). The logic is compelling from several angles. Firstly, it would allow for greater management bandwidth to be dedicated to these core areas, which face intense competition and require flawless execution.

Secondly, a sale could yield a significant capital infusion. While no official valuation for NEX has been discussed, unlocking capital from a multi-billion dollar revenue business could substantially strengthen Intel’s balance sheet, providing more firepower for the hefty investments required in advanced manufacturing for IFS or research and development in next-generation CPUs and AI accelerators. This approach mirrors the strategy seen with the announced sale of a 51% stake in the Altera FPGA business to Silver Lake, suggesting a clear pattern of monetizing assets deemed non-central to the primary mission.

Furthermore, the networking market is notoriously competitive, with established players like Broadcom (NASDAQ: AVGO)holding significant sway, potentially making a dedicated focus by a specialized entity more viable than within Intel’s broader conglomerate structure.

Intel’s Foundry Path Gains Clarity

Recent statements from Intel’s leadership reinforce confidence in the long-term viability of its Intel Foundry Services (IFS) division. CFO Dave Zinsner stated on May 13 that IFS is expected to reach break-even status by 2027. He also emphasized the strategic importance of domestic manufacturing projects like the Ohio One plant within the broader IFS plan, despite adjustments to its operational ramp-up timeline into the early 2030s.

These affirmations align with CEO Lip-Bu Tan’s internal restructuring efforts, including layoffs aimed at creating a more agile, engineering-centric organization. Tan’s proactive customer engagement is a key strategy to build trust and tailor IFS offerings. Establishing IFS as a credible, customer-focused manufacturer is central to Intel’s long-term growth.

Seeking Value in Intel’s Evolving Strategy

Despite these strategic initiatives aimed at streamlining operations and fortifying long-term growth engines, Intel’s stock price continues to face a challenging market environment. This prevailing skepticism appears heavily influenced by Intel’s weak financial guidance for the second quarter of 2025, which projected breakeven non-GAAP earnings per share(EPS), and the continued operating losses from Intel Foundry Services, which amounted to $2.3 billion in the first quarter alone.

However, from a contrarian or value investing perspective, a disconnect might be perceived between these near-term headwinds and the potential long-term benefits of Intel’s strategic realignment. Valuation metrics such as a Price-to-Book ratio (P/B) of approximately 0.88 indicate that the company’s market value is less than the accounting value of its assets, a situation that can sometimes signal undervaluation.

If CEO Lip-Bu Tan’s efforts to create a more focused and efficient Intel succeed, and if IFS can indeed reach its 2027 break-even target and capture a meaningful share of the foundry market, the current stock price might not fully reflect this future earnings power. The argument could be made that the market is heavily discounting these strategic shifts, creating a potential opportunity for investors with a longer time horizon who believe in the ultimate success of the turnaround.

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