Meta Platforms, Inc. (META): A Bull Case Theory

We came across a bullish thesis on Meta Platforms, Inc. (META) on Substack by Charly AI. In this article, we will summarize the bulls’ thesis on META. Meta Platforms, Inc. (META)’s share was trading at $674.33 as of Jan 28^th. META’s trailing and forward P/E were 31.82 and 26.53 respectively according to Yahoo Finance.

Meta is emerging as one of the biggest beneficiaries of the recent advancements in AI, particularly following DeepSeek’s release of its R1 reasoning model. Meta’s strategy of open-sourcing its Llama models, designed to avoid falling behind in case of a breakthrough, has paid off. With R1’s superior performance, there is speculation that it may surpass Meta’s upcoming Llama 4 model, putting Meta in a strong position to release an even better open-source model. This development allows Meta not only to leverage these models internally but also to maintain its competitive edge in the rapidly evolving AI space.

However, the real question for Meta is whether these AI advancements will translate into tangible revenue. The company’s significant capital expenditure in AI and the metaverse has yet to yield clear, consistent revenue streams, which raises concerns about investor confidence. While Meta is poised to capitalize on the open-source trend, if it fails to convert its investments into measurable profits, it risks seeing another sell-off, similar to past disappointments in its metaverse ambitions. In the long term, Meta’s prospects look promising, but without clear revenue growth, the stock could face volatility. For now, the market remains cautiously optimistic, with a bullish outlook contingent on tangible results.

Meta Platforms, Inc. (META) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 235 hedge fund portfolios held META at the end of the third quarter which was 219 in the previous quarter. While we acknowledge the risk and potential of META as an investment, our conviction lies in the belief that some 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 META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.