Mizuho named three stocks that will benefit from the AI boom. The favorite could grow by 50%

Mizuho analysts have selected three stocks that they believe will be the main beneficiaries of the current AI boom. Two of them - Meta (owner of Instagram) and Alphabet (Google's holding company) - are already benefiting from the AI trend, while Pinterest is just getting ready for a breakthrough, they believe. Mizuho predicted the online platform's stock to rise nearly 57% thanks to its aggressive investment in AI.

Mizuho analysts have named the three main beneficiaries of the AI boom: Meta, Alphabet and Pinterest. At the same time, according to Mizuho expert Lloyd Walmsley, Meta and Alphabet shares are clear favorites, while Pinterest has yet to impress investors, The Barron's notes.

Mizuho began analyst coverage of Meta stock and gave the stock its first rating of "Outperform" (Outperform), which corresponds to a buy recommendation. The analysts also set the target price at $925. This estimate assumes growth of 28% from the opening price on October 1. The target price is based on a 25x multiple to Meta's projected 2027 earnings. Analysts estimate that the company's advertising revenue will grow 18% in 2026 and 16% in 2027 - slightly above the current Wall Street consensus forecast.

Alphabet also received an Outperform recommendation with a target price of $295, which implies a 22% upside potential. Analysts recognize that there are ongoing debates around the company's search business about the possible risks of AI, but believe that Google's own developments mitigate the threat of losing market share to competitors like ChatGPT.

In a note to investors, Mizuho notes that Meta and Google are well positioned to capitalize on the AI trend. Meta claims AI is markedly increasing the time users spend on Instagram and Facebook, and is already helping advertisers with new tools. Google, for its part, is counting on the rise in engagement on YouTube and is using colossal amounts of data to improve the effectiveness of its advertising algorithms.

While Mizuho analysts see a growth potential of 20-25% for Meta and Alphabet, the forecasts for Pinterest are much more impressive. The company's securities have a target price of $50, which is almost 57% higher than the current level.

"We expect results above consensus estimates and are laying out expanding multiples as Pinterest's revenue growth and margin improvement are sustained," said Lloyd Walmsley.

Mizuho estimates that online advertising as a whole is poised to benefit from an "AI race" that could accelerate the development of the entire market.

"We are particularly positive on the online advertising segment due to several factors: AI increases user engagement, improves ad effectiveness, expands the potential market, and opens up new opportunities through customer acquisition spending by AI-native companies," the survey said.

Pinterest, in turn, is actively investing in AI in order to show users more relevant content and offer advertisers more effective tools. According to analysts, this will allow the company to take a larger share of advertising budgets.

Meta stock has a total of 71 ratings from analysts, Marketwatch shows. Of those, 61 recommend buying the stock, nine advise holding, and one sells. The consensus target price is $869.3 per share, which is 20.7% above their current value.

Out of 73 analysts tracking Alphabet securities, 60 recommend buy, 13 recommend hold. The consensus target price is $244.5 per share, which is only 1.3% above their current value.

Pinterest has 43 analyst recommendations: 36 buy, six hold and one sell . The consensus target price is $43.3 per share, which implies a 35.6% upside.

This article was AI-translated and verified by a human editor