Insider Monkey recently analyzed billionaire Druckenmiller’s latest Q1’2024 portfolio to see which AI stocks the billionaire was buying. Meta Platforms Inc (NASDAQ:META) is part of the 10 Best AI stocks to Buy According to Billionaire Stanley Druckenmiller.
But the interesting question to answer is: Is Meta really the best AI pick of Druckenmiller?
Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 242
After bagging huge profits from his Nvidia stake, billionaire Stanley Druckemiller is pouring money into the consumer-side AI companies that are using AI technologies to their advantage to boost and optimize online content consumption, including text, images and video. Stanley Druckenmiller’s Duquesne Family Office bought a $31,043,000 stake in Meta Platforms Inc (NASDAQ:META) during the first quarter of 2024.
How Does Meta Platforms Stand Out Among the AI Competition?
Meta Platforms Inc (NASDAQ:META), thanks to its multiple revenue streams and the huge user base it captures (Instagram, Facebook, WhatsApp), can leverage AI to its advantage in a much efficient way when compared to peers. For example, Meta Platforms Inc (NASDAQ:META) plans to use ‘Llama 3’ LLM to introduce new automation features in its business messaging on Facebook. This technology, called “Business AIs”, would help consumers get answers to their questions and will speed up the buying process. Analysts believe this could give further boost to online shopping on the platform.
Meta Platforms Inc (NASDAQ:META) has also revealed Generative adversarial networks (GANs) technology to create images, text-to-video generative AI application called Make-A-Video and several other tools for consumers to play with AI, causing a rise in usage and engagement.
Meta Using AI to Increase Engagement and Ads Revenue
On the backend, Meta Platforms Inc (NASDAQ:META) is using AI for optimize 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’s Huge CapEx Will Payoff
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.
Meta Platforms Inc’s (NASDAQ:META) management sensed the need to calm investors about this metric during the latest earnings call. Meta Platforms Inc’s (NASDAQ:META) CFO Susan Li said:
We anticipate our full year 2024 capital expenditures will be in the range of $35 billion to $40 billion, increased from our prior range of $30 billion to $37 billion as we continue to accelerate our infrastructure investments to support our AI roadmap. While we are not providing guidance for years beyond 2024, we expect CapEx will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts. On to tax. Absent any changes to our tax landscape, we expect our full year 2024 tax rate to be in the mid-teens. In closing, Q1 was a good start to the year. We’re seeing strong momentum within our Family of Apps and are making important progress on our longer term AI and Reality Labs initiatives that have the potential to transform the way people interact with our services over the coming years.
Patient Capital Opportunity Equity Strategy stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was a top contributor in the first quarter gaining another 37.5%. Performance has been supported by strong top and bottom-line growth as the company maintains its leadership in the advertising space, despite Reels still being under monetized versus Newsfeed and Stories. The company continues to return cash to shareholders, increasing their buyback program by another $50B in February (6.4% of shares outstanding), and announcing their first dividend of $0.50 per share (0.39% yield). The company trades at 25x this year’s earnings, which we do not view as too demanding for a company with some of the best AI assets, an improving topline that should lead to free cash flow outperformance and continued capital return.”
Meta Platforms Inc (NASDAQ:META) shares have gained about 92% over the past one year.
Is Meta Platforms Stanley Druckenmiller’s Best AI Stock Pick?
Despite the positive sentiment and growth catalysts, Insider Monkey’s research shows that Meta Platforms Inc (NASDAQ:META) is not the best AI stock to buy in Stanley Druckenmiller’s portfolio.
Click to see The Best AI Stock in Stanley Druckenmiller’s Portfolio better than Meta Platforms Inc (NASDAQ:META).
You can also see the complete list of Stanley Druckenmiller’s 10 Best AI Stock Picks in 2024.
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