2. Meta Platforms Inc (NASDAQ:META)
Altimeter Capital’s Stake Value: $1,144,706,778
Number of Hedge Fund Holders: 246
Second on our list and Brad Gerstner’s portfolio is Meta Platforms Inc (NASDAQ:META). In the first quarter of 2024, the company launched Generative AI image expansion tools on Facebook and Instagram reels. The update has witnessed widespread adoption by small businesses. The company has been making significant progress on AI and Metaverse and plans to increase spending from $35 billion to $40 billion. The decision is driven by significant investments in AI, data centers, chip designs, and R&D. In April, Meta Platforms Inc (NASDAQ:META) introduced its next generation of custom chips to manage the company’s AI workloads. The chips are designed to balance compute, memory bandwidth, and memory capacity for ranking and recommendation models. Last year, the company launched its Meta Training and Inference Accelerator (MTIA), its first-gen AI inference accelerator. The accelerator is focused on developing efficient architecture for the company’s workloads.
At the close of Q1 2024, 246 investors disclosed positions in the stock with total stakes amounting to $46.92 billion, up by $44.17 billion from the previous quarter. Considering analysts expect Meta’s earnings to grow by 27% this year and 46% by 2025, it is a great pick by Brad Gerstner.
In 2022, Gerstner sent an open letter to the CEO of META, Mark Zuckerburg, asking for cost-cutting and improving efficiencies. Exactly a year later, on October 26, 2023, Brad Gerstner appeared in an interview on CNBC, where he stated that he regained confidence in the stock after META decided to pursue efficiency throughout the year. He stated that the company has increased its free cash flow from $18 billion to $35 billion in a year, and reduced its headcount by 24% to become a more efficient company. Here are some comments from the interview:
“A couple months after we wrote the letter, that mark first declared it the year of efficiency, discipline, and rigor. And has he delivered imagine a year ago thinking that they could reaccelerate the top line of the business, while doubling free cash flow from $18 billion to $35 billion, and let’s talk about efficiency. He and Elon Musk stand atop the heap of efficiency and reduced head count 24% year over year. From 85,000 to 65,000 employees. Find me another large company in Silicon Valley other than those two that can demonstrate accelerating top lines while reducing head count and get more fit.”
On February 2, Gerstner later appeared in interviews on CNBC and talked about how Meta reacted to his letter. He pointed out that the stock gained nearly 270% since his letter, and the company grew its free cash flow by 28% and revenue by 25% in the last quarter of 2023. Moreover, Meta’s earnings per person grew by 3x over the past 15 months. Gerstner is bullish on Meta’s investments in AI and tech particularly the $20 billion investment in its AR/VR business, which the hedge fund manager believes will add to its enterprise value.
