UBS’ Top Quant Stocks In AI, IT, Healthcare & Other Sectors: Top 33 Stocks In All Sectors

1. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Investors In Q2 2024: 219

Sector: Communication Services

Meta Platforms, Inc. (NASDAQ:META) is the largest social media and communications services company in the world. Its Facebook social network boasts a whopping 3.2 billion users. This user base is key to Meta Platforms, Inc. (NASDAQ:META)’s hypothesis, as it makes it indispensable to advertisers for running their campaigns. The firm’s social media dominance has also enabled it to establish sizable financial resources as is evident by its trailing twelve-month revenue of $156 billion and cash and equivalents of $43.9 billion. In turn, Meta Platforms, Inc. (NASDAQ:META) has used its sizable resources to develop a foothold in the AI industry via its Llama foundational AI model. Through Llama, the firm offers AI marketing services to advertisers and image editing and associated services to consumers. Consequently, the billions that the firm has invested in AI are now baked into its hypothesis, with the share price dependent on Meta Platforms, Inc. (NASDAQ:META)’s ability to generate AI profits to convince investors that the spending was worth it. This was clear after the firm’s Q3 earnings which saw the stock drop by 3% after Meta Platforms, Inc. (NASDAQ:META) increased its low-end 2024 CapEx guideline by $1 billion to $38 billion.

Polen Capital mentioned Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter. Here is what the fund said:

“Meta Platforms delivered robust results in the period, with revenue growth accelerating in the first quarter. However, revenue comparisons for Meta will become more difficult from here, and its guidance for 2Q revenue fell below market expectations. After the company’s “year of efficiency,” where it cut costs in its core business, management is now indicating another ramp-up in GenAI and metaverse spending, spurring concerns about future profit margins. Metaverse spending, by our calculations, is now over $20 billion per year with little to no expected return on the foreseeable horizon.”

META is a top stock with improving technical indicators according to UBS. While we acknowledge the potential of META as an investment, our conviction lies in the belief that 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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