After Meta introduced paid subscription plans for consumers and businesses, along with its new Meta One AI subscription service, Evercore ISI reiterated its Outperform rating on the stock and maintained its US$930 price target. Evercore believes the launch of these subscription products represents an important step in Meta’s strategy to diversify revenue streams. While the initiative could provide a modest boost to revenue in the near term, its impact on operating profit is expected to be much more significant over the long run.

Meta is currently rolling out its consumer-focused Plus subscription service across Facebook, Instagram, and WhatsApp, while also introducing Meta One AI subscription tiers for consumers and Meta One plans for businesses.

Evercore estimates that the consumer Plus subscription service could achieve a penetration rate of 2% to 4% within the next two to three years. By 2028, the service could contribute approximately US$5 billion to US$10 billion in incremental revenue and US$3.5 billion to US$7 billion in incremental operating profit.

For the Meta One AI subscription service, Evercore estimates that if penetration reaches 2% to 3% among Meta’s roughly 1 billion monthly active users, and assuming an average revenue per user of US$9.99, the service could generate between US$2.4 billion and US$3.6 billion in annual revenue by 2028, along with US$1.2 billion to US$1.8 billion in operating profit.

On the enterprise side, Evercore estimates that if Meta achieves a penetration rate of 5% to 10% among its approximately 200 million business accounts, with an average revenue per user of US$19.99, the opportunity could generate US$2.4 billion to US$4.8 billion in annual revenue by 2028 and contribute US$1.2 billion to US$2.4 billionin incremental operating profit.

Combining all of these subscription initiatives, Evercore believes Meta could generate more than US$10 billion in incremental revenue and over US$5 billion in incremental operating profit from subscriptions by 2028.

This would represent approximately 3% of Evercore’s 2028 revenue forecast of US$370 billion, which is above current market expectations, and around 4% of its projected operating profit forecast of US$137 billion, also above consensus estimates.

Meta has also reached a new agreement with data center developer Crusoe to purchase artificial intelligence computing capacity from its facilities, further strengthening the infrastructure needed to support its AI expansion plans.

The social media giant has signed contracts to procure computing resources from Crusoe’s data centers located in Childress, Texas, and Warrenton, Missouri.

Market Analysis:

According to sources familiar with the matter, Meta is expected to secure approximately 1.6 gigawatts of computing capacity from the two facilities combined.

For context, 1 gigawatt of electricity is capable of powering as many as 750,000 US households at any given time.

The financial terms of the agreement and the timeline for delivering the computing capacity have not yet been disclosed.

Because the negotiations are private, the individuals familiar with the discussions requested anonymity.