1. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 219
Jim Cramer advises holding onto Meta Platforms Inc. (NASDAQ:META), noting that it remains relatively inexpensive compared to other major tech stocks, especially after recent developments with Alphabet Inc. (NASDAQ:GOOG). He suggests that if Meta Platforms Inc. (NASDAQ:META)’s stock price were to drop significantly, say by 100 points, it would be a good opportunity to buy more shares.
“You’re going to hold Meta because it’s not expensive, believe it or not. It’s probably the least expensive of the mega caps, especially after what happened with Alphabet. Here’s what I would say: if it went down, let’s say 100 points, you should buy another 25 shares. I’m not advocating selling it right here because there’s too much in the pipeline that could be very good. We’re on a down day, and a lot of people freak out on down days. So, stay the course.”
Meta Platforms Inc. (NASDAQ:META) presents a strong investment opportunity due to its leadership in social media, solid advertising revenue, and strategic focus on virtual and augmented reality. With popular platforms like Facebook, Instagram, and WhatsApp, Meta Platforms Inc. (NASDAQ:META) has a vast and engaged user base, which drives significant ad revenue. In Q2 2024, Meta Platforms Inc. (NASDAQ:META)’s advertising revenue reached $32 billion, demonstrating its effective ad targeting and the strength of its core business.
Meta Platforms Inc. (NASDAQ:META)’s investment in virtual and augmented reality, particularly through its Reality Labs division, is a major growth driver. Projects like Horizon Workrooms aim to open new revenue streams and support long-term growth. Meta Platforms Inc. (NASDAQ:META)’s continuous innovation in its product offerings ensures high user engagement and helps it stay competitive in the fast-changing tech world. Financially, Meta Platforms Inc. (NASDAQ:META) is robust, with Q2 2024 revenues of $35 billion and net income of $10 billion, reflecting its strong profitability and ability to invest in future opportunities.
Mar Vista Focus strategy stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“During the quarter, we established new investments in Broadcom and Meta Platforms, Inc. (NASDAQ:META). We previously divested from Meta during a period of stagnant advertising growth and the company’s initial, significant investment in the metaverse project. At that time, investors appeared complacent to the risks associated to an increasingly competitive landscape, and the Street’s robust financial expectations as the company transitioned towards monetizing short-format video (Reels). The subsequent decline in Meta’s stock price during 2022 reflected these concerns.
Since then, Meta has demonstrably shifted its strategic focus. The company has prioritized operational efficiency, implemented strategies to monetize Reels effectively, and initiated a robust artificial intelligence (AI) development program. We believe the focus on AI represents a more prudent capital allocation strategy compared to the earlier metaverse initiative. Meta AI holds significant potential to unlock substantial monetization opportunities and enhance user engagement, while maintaining tight controls on operating costs…” (Click here to read the full text)
While we acknowledge the potential of Meta Platforms, Inc. (NASDAQ:META), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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