3. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 246
Meta Platforms Inc (NASDAQ:META) is also one of the stocks Dan Ives of Wedbush named in his fresh note about stocks that can rise based on the AI tidal wave.
Meta Platforms (NASDAQ:META) revealed its first-gen inference accelerator the company produced in-house called Meta Training and Inference Accelerator (MTIA). UBS recently named the accelerator as Meta Platforms’ (NASDAQ:META) strength in the AI Enabling layer, while Llama and advertising are social media giant’s moat points in the Intelligence and Application layers in the AI value chain.
Why is Meta Platforms Inc. (NASDAQ:META) a promising AI stock? The social media giant is using AI for optimizing ad targeting and recommendation systems to boost engagement and ads revenue. In the first quarter, Meta Platforms Inc’s (NASDAQ:META) revenue jumped 27% to $36.5 billion. A whopping 97% of this revenue came courtesy of ads. In 2024, Meta Platforms Inc’s (NASDAQ:META) ads revenue is expected to rise by 17%. Reels, which is posting solid numbers and engagement lately, saw a 20% ad load in the first quarter, compared with 16.2% in the same quarter last year. Meta Platforms Inc (NASDAQ:META) recently posted speculator Q1 results but the stock slipped after the company revealed that Meta Platforms Inc’s (NASDAQ:META) CapEx will come in the range of $35 billion to $40 billion, higher than the previous forecast of $30 billion to $37 billion. However, long-term analysts believe since most of this spending will go into AI projects, it’ll bode well for the stock down the road.
Based on its 2025 EPS estimate of $23.11 set by Wall Street, Meta Platforms Inc. (NASDAQ:META) is trading at a forward P/E of 21, which makes the stock attractively valued given Meta’s earnings are expected to grow 14.50% next year and by 30% over the next five years on a per-annum basis.
RGA Investment Advisors stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:
“We believe this section is crucial for highlighting some of the key lessons we have learned since 2022. At the outset, let us clarify that Meta Platforms, Inc. (NASDAQ:META) remains one of our three largest positions, fluctuating based on daily market movements. As you read this, it might in fact be our largest holding. In the closing remarks of our Q4 2022 commentary, we noted that we had “made…META substantially larger” during the quarter. Never did we expect the stock to generate such substantial returns in a short period of time. Between Mark Zuckerberg’s “Year of Efficiency,” a recovery in the digital ad market and an improving macro backdrop, META’s key multiples recovered to a comfortable level within their long-term ranges:
Although these multiples are now back to “normal” levels, they are hardly expensive for a company whose top line growth re-accelerated into the double digits, with operating leverage and despite ongoing heavy investments in the Reality Labs segment. These are the reasons why we continue to hold a large position in META. As for why we did some selling, we want to emphasize a few key points:…” (Click here to read the full text)
