4. Meta Platforms, Inc. (NASDAQ:META)
D.E. Shaw & Co’s Stake Value: $976.47 Million
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) is a communications services company that provides applications that allow people to connect and share with friends and family. It is one of the best stocks to buy, according to billionaire D.E. Shaw, owing to its dominance in social media advertising. The company is increasingly investing in artificial intelligence as it looks to enhance user experience in its apps and engagement levels to attract more advertising campaigns.
Meta Platforms, Inc. (NASDAQ:META) is up by more than 73% in 2024, demonstrating strong financial performance over the year. Its outstanding 23% year-over-year revenue growth has outpaced the digital advertising industry. Likewise, the company boasts an exceptional gross margin of 81.5%, allowing it to generate more earnings and, therefore, higher shareholder value.
While the global digital advertising market is poised to exceed $1.15 trillion by 2030, Meta Platforms is making the most in the fast-growing sector. The company is investing more in artificial intelligence tools to drive returns for advertisers and, therefore, attract more dollars in ad campaigns.
Advertisers have seen an 8% increase in the quality of ads they can produce when they use Meta’s Andromeda machine learning (ML) tool. The social networking giant also notes that returns on investment have increased by 22% as a result of advertisers using its Advantage+ tool, which uses AI to help them target audiences. Because of this, Meta Platforms, Inc. (NASDAQ:META) has a good chance of continuing to grow faster than the digital ad market for a very long time.
Hardman Johnston Global Equity stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q3 2024 investor letter:
“During the quarter, we initiated one new position in Meta Platforms, Inc. (NASDAQ:META) and had no liquidations. Management at Meta has effectively addressed concerns about investment efficiency by shifting resources from Reality Labs towards broader AI initiatives with a clearer path to profitability. We believe management has successfully articulated the benefits of this strategy, highlighting how AI is driving user engagement and advertiser productivity. This, in turn, fuels continued revenue momentum and increases the likelihood of positive earnings surprises in the future. Additionally, the parent company of the social media platform, Facebook, has recently taken positive steps to enhance safety, which suggests to us a shift towards a more proactive and responsive approach to addressing important potential challenges and concerns. Weak oversight over data privacy protection was a key reason why we sold the position in the portfolio back in 2021. Removing this governance overhang allows us to feel comfortable to enter back into the stock at a time when we believe it is poised for strong earnings growth going forward.”
