Investing.com -- Wall Street firms are turning more constructive on marketing technology firm Zeta Global ahead of the company’s first-quarter report on Thursday.

Brokerage KeyBanc Capital Markets on Tuesday upgraded the stock to Overweight with a $22 price target, arguing that Zeta’s usage-based business model and proprietary data asset position it as a potential beneficiary of the AI wave.

Zeta shares rose 2.1% in premarket trading Wednesday.

A key driver behind the upgrade is Athena, Zeta’s AI-powered marketing agent built on OpenAI, which became generally available on March 24. Early beta customers "are spending materially more through the Zeta platform" since adopting the product, KeyBanc analysts led by Jack Nichols noted.

“Zeta could be in the early innings of a multi-pronged inflection toward a more recurring business model benefiting from AI tailwinds,” the analysts said, adding that Athena “may act as an accelerant driving larger recurring-revenue mix and ARPU expansion.”

KeyBanc expects recurring revenue to account for roughly 60% of total revenue in 2025, up from 55% in 2023, following the close of the Marigold acquisition.

Unlike traditional seat-based software vendors facing displacement risk from AI agents, Zeta’s consumption model means more automated marketing campaigns could translate directly into higher platform usage and revenue.

Nichols also pointed to Zeta’s proprietary identity graph — covering 245 million U.S. citizens — as a defensible competitive moat.

Management has stated that foundational AI models and third parties will not be given access to the asset, which enriches customer first-party data to drive higher return on advertising spend.

Some customers are already generating a 600% return on ad spend through the platform, with management targeting figures closer to 1,000% with AI capabilities, KeyBanc highlighted.

Still, some concerns around the stock remain. Nichols flagged that roughly a third of Zeta’s revenues flow through non-Zeta-owned channels such as social media, which carry structurally lower gross margins and create a ceiling on future free cash flow expansion.

Free cash flow margins, excluding stock-based compensation, were negative 1% in 2025, though they are expected to turn positive in 2026 as SBC continues declining as a percentage of revenue.

In a separate note, Morgan Stanley analysts identified Zeta as a tactically positive setup into Q1 results.

The team expects the company to deliver roughly 350 basis points of upside to Street estimates, implying approximately 26% organic revenue growth, along with a slight raise to full-year organic guidance.

“With valuation undemanding on a growth-adjusted basis, potential for positive revisions on the print support a tactically positive view,” the bank’s analysts wrote.