2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
10-year Revenue CAGR: 31.07%
Meta Platforms, Inc. (NASDAQ:META), previously known as Facebook, Inc., is a prominent American multinational technology company. It operates through two primary business divisions, Family of Apps and Reality Labs.
The Family of Apps segment features platforms like Facebook, Instagram, Messenger, and WhatsApp, generating revenue mainly through advertising sales. This division enables users to connect, share content, and interact with various communities while offering secure messaging tools for personal and group communications.
On the other hand, the Reality Labs segment focuses on augmented and virtual reality, encompassing consumer hardware, software, and content. This includes products such as the Oculus VR headsets and Facebook Reality Labs, which spearheads the company’s AR/VR research and development efforts.
Additionally, the company has been expanding the offerings of Metaverse, utilizing artificial intelligence and immersive technologies to craft unique experiences. The company is actively promoting several AI-driven products, including Meta AI, a virtual assistant powered by AI, and smart devices like Meta Smart Glasses and Meta Quest, which use AI to deliver advanced computational capabilities directly to users.
Meta (NASDAQ:META) has positioned itself as a dominant force in the digital landscape, owing to its vast user base and advanced technological infrastructure. With 3.27 billion daily active users across Facebook, Instagram, WhatsApp, and Threads, it holds an impressive amount of first-party data. This extensive user engagement provides a critical advantage in developing and refining AI models, which is essential for maintaining a competitive edge.
The company’s investment in technology is substantial. It has acquired nearly 600,000 of Nvidia’s H100 GPUs, a top-tier component for AI computing, and is also developing its own custom chip to further improve its capabilities.
On top of this, the company has introduced its own AI models, such as Llama, which is integrated into its apps and made available to external developers. This positions it as a significant player in the AI ecosystem, which allows control over its development and application across its platforms.
The impact of these advancements is evident in Meta’s (NASDAQ:META) financial performance. In the second quarter, the company saw a 7% increase in daily active users while achieving a 58% boost in operating income. The company’s dominance in digital advertising is reinforced by its AI-driven tools that enhance ad effectiveness by matching ads more precisely with target audiences. This has contributed to a 22% year-over-year revenue growth and a remarkable 73% increase in earnings per share. The company’s revenue surge is supported by a 10% increase in both the number of ads served and the cost per ad.
In addition to advertising, Meta (NASDAQ:META) is expanding its footprint in the video segment. Engagement with Reels is growing, and the new unified video player for Facebook has shown promising results. The company’s efforts to enhance its text-based platforms are also showing potential for further user base expansion and revenue growth.
WhatsApp remains the world’s leading messenger app with over 2 billion users, including more than 100 million monthly active users in the United States. Threads is rapidly gaining traction, with nearly 200 million monthly active users, and could become a significant revenue contributor if the company decides to monetize it.
Meta (NASDAQ:META) combines its extensive user base, cutting-edge AI technology, and advanced advertising capabilities to drive growth and drive its market position. As it continues to innovate and expand, the company appears well-positioned to capitalize on its strengths and achieve further success.
In Q2, 219 hedge funds had investments in Meta (NASDAQ:META), with positions worth $42.54 billion. GQG Partners is the top investor in the company as of the second quarter and has a stake worth $5.4 billion.
Fred Alger Management stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q1 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) operates the world’s largest social network, with over 3 billion monthly active users across its platform. The company generates revenue predominantly from advertising. which accounts for over 95% of its total revenue, evenly split between North America and international markets. During the quarter, shares contributed to performance following the release of strong fiscal fourth quarter operating results, with revenues and earnings surpassing analyst estimates. The better-than- expected revenues were attributed to strong advertiser demand and Al-driven ad improvements. Moreover, the company materially raised its fiscal first quarter sales and earnings guidance above analysts’ estimates, buoyed by continued strong advertiser demand trends and enhancements to Reels. Advantage+. Click-to-message, and Shop Ads. Further, management noted that ongoing investment in Al is enhancing user engagement and advertiser returns through improved targeting and measurement. Separately, Meta authorized a new share repurchase plan representing approximately 5% of its market capitalization and announced the initiation of its first dividend, implying an approximate 0.4% yield.”
