By Aditya Soni

Meta shares surged nearly 8% on Thursday as a rosy revenue forecast showed that artificial intelligence was helping the social media giant boost engagement and ad sales even in an uncertain economy.

The Facebook owner was set to add about $60 billion to its market value, based on premarket movements, after strong second-quarter earnings encouraged 16 analysts to lift their target price on a stock that has already more than doubled this year.

"Meta (is) in a class-of-their-own in digital ads," said Mark Shmulik of Bernstein, adding that its "monster guidance blew the doors off with an expected growth rate of +15-24% — numbers investors were hoping to maybe see as early as Q4."

The 12% rise in ad revenue in the second quarter also surpassed the 3% growth seen at Alphabet-owned Google, thanks to continued engagement growth and improving monetization of Reels, a short-form video format that is Meta's answer to TikTok.

CEO Mark Zuckerberg said Reels now had an annual revenue run rate exceeding $10 billion, up from $3 billion last fall.

"Advertisers are gaining confidence in Meta's enhanced and AI-powered campaign planning and measurement capabilities, and spending more. Unsurprisingly, Reels monetization keeps improving," said Morningstar analyst Ali Mogharabi.

The positive analyst view reinforces how a focus on cost cuts and higher engagement through AI has helped Meta turn into a Wall Street darling this year after being derided for much of 2022 for its hefty spending on the ambitious metaverse.

Analysts have a median price target $342.50 on Meta, which represents an upside of nearly 15% to its stock's last close.

The company has 12-month forward price-to-earnings ratio of 21.28, higher than Alphabet's 20.47 and the industry median of 15.18.

(Reporting by Aditya Soni in Bengaluru; Editing by Saumyadeb Chakrabarty)