Meta aims to fully automate ads with AI
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Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis.

Good afternoon. Today is Monday, June 2nd, and I'm your host, Kim Kahn. Our top story so far. Meta Platforms plans to let brands create and target ads fully through AI by the end of next year. The Wall Street Journal says Meta's ad platform already offers some AI tools that can generate variations of existing ads and make small changes to them before targeting the ads to users on Facebook and Instagram. But now the company intends to help brands create advertising concepts.

Using the ad tools Meta is developing, a brand could present an image of a product it plans to promote with a budgetary goal, and AI would make the entire ad, including images, video, and text. The system would then decide which Instagram and Facebook users to target and offer suggestions on budget. In addition, Meta intends to let advertisers personalize ads using AI so that users see different versions of the same ad in real time based on factors like location.

But the report added that some large brands are concerned about providing Meta even more control over their advertising efforts due to the company's presence in the business and worry that AI-generated ads would not have the same look and feel as human-made ads. Also in the AI sector, two players are looking to raise cash. Nebius entered into an agreement for the private placement of senior unsecured convertible notes totaling $1 billion.

The offering has two tranches, a 500 million 2% offering due 2029 and a 500 million 3% offering due 2031. Nebius expects to use the proceeds for general corporate purposes, the company said in a filing. And Big Bear AI disclosed that it had entered into an agreement with Cantor Fitzgerald to sell up to $150 million in an at-the-money stock offering. The stock is down 6.5% year-to-date, but over the past 12 months, shares have jumped 171%.

Among other active stocks, Campbell's company topped expectations for its fiscal third quarter. The company reaffirmed its full-year fiscal 2025 guidance provided on March 5th for sales growth of about 68%. Full-year adjusted EPS is seen falling on the low end of the range of 295 to 305 versus 298 consensus. CEO Mick Buchheisen says,

Consumers are cooking at home at the highest levels since early 2020 and turning to our brands for value, quality, and convenience. Morgan Stanley reiterated its overrate rating on Cisco Systems with a $67 price target. Analyst Meta Marshall said the campus switching is Cisco's largest product segment, where a nearly $60 billion installed base should begin an upgrade in fiscal 2026, about eight years after the last cycle.

And the sports betting sector was rocked by a late addition to the Illinois budget signed over the weekend by Governor J.B. Pritzker. The budget included a new tax that will apply to every online sports wager placed in the state, on top of the progressive tax system already in place.

Truist analyst Barry Jonas noted that the impact would again be skewed to DraftKings and Flutter Entertainment due to their high volume of betting action in Illinois. And in the Wall Street Research corner, Morgan Stanley's cross-asset strategy team is still bullish on U.S. exceptionalism. They recommend an equal weight in global equities and an overweight in the U.S.,

Substantial monetary easing lies ahead, along with the benefits of deregulation making our outlook for markets relatively constructive, they said. U.S. strategists also see de-escalation in U.S. China trade tensions, lowering recession probabilities as constructive, removing the most extreme downside scenarios. In other words, we think that stocks won't revisit the lows of April in the near term, especially since the large drawdowns experienced here to date have mainly been reactions to tariff shock and awe, they added.

That's all for today's Wall Street Lunch. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com slash WSB. And make sure you're getting the most out of your portfolio with quant, news, and analysis by heading to SeekingAlpha.com slash subscriptions.