Jefferies Estimates Meta’s Llama AI Business Could Be Worth $10-$20 Billion, Suggests Open-Source Growth Path Similar to Red Hat

Jefferies estimates that Meta’s Llama AI models could be valued between $10-20 billion, which could contribute over a 1% increase to Meta’s market capitalization.

This valuation highlights Meta’s strong position in the open-source AI space, supported by its access to extensive data and computing resources, along with a large user base.

Despite this, the estimated value is still much lower than OpenAI’s $86 billion, largely because Llama has yet to develop significant monetization strategies.

Analysts suggest that Llama’s business model might be similar to that of Red Hat, which IBM acquired for $34 billion, or the creators of Spark, focusing more on open-source growth and partnerships rather than direct revenue generation.

Usage of Llama’s tokens has seen significant growth, doubling between May and July 2024, and increasing tenfold since January 2024 among major cloud service providers.

While Meta’s revenue-sharing deals with these cloud service providers are expected to remain minimal for now, there have been discussions between Amazon and Meta about a potential deal. This deal could see Meta spending over $1 billion annually on Amazon Web Services (AWS), positioning AWS to be one of the biggest beneficiaries of Llama’s growth.