Social media company Snap (NYSE:SNAP) launched a suite of new augmented reality (AR) experiences powered by generative artificial intelligence (AI) technology. This will allow users to see more realistic special effects in their content. This innovation will make Snap a leader in AR and boost its financial and competitive positioning.
Besides for users, Snap has expanded its Lens Studio platform for developers, offering a range of generative AI tools. These enhancements will enable developers to create AI-powered lenses for Snapchat.
Snap Betting on AI and ML
Snap’s commitment to AI and machine learning (ML) enhances its direct response (DR) ad platform and boosts content engagement. This will help attract new users and advertisers to Snapchat, its instant messaging app. Moreover, it will help Snap strengthen its position against bigger rivals like Meta (NASDAQ:META).
During the Q1 2024 earnings call, Snap’s leadership highlighted the company’s increased investments in AI and ML. These investments will likely bolster the DR ad platform, which has seen an uptick in demand.
It’s important to note that Snap’s revenue has shown a robust 21% year-over-year increase, reaching $1.195 billion in Q1. This growth is primarily driven by a 16% rise in advertising revenue. The DR portion of advertising revenue has seen a significant 17% year-over-year jump, up from 3% growth in the previous quarter, indicating a clear increase in demand.
Is Snap a Buy, Sell, or Hold?
Snap stock is down about 7% year-to-date, underperforming the broader market indices. Wall Street analysts remain sidelined in Snap stock due to macro uncertainty, which could weigh on its advertising revenues. Nonetheless, the company’s investments in AI and its integration into products are positive.
With eight Buys, 18 Holds, and two Sell recommendations, Snap stock has a Hold consensus rating. The analysts’ average SNAP stock price target is $15.59, implying 1.33% downside potential from current levels.
