Wells Fargo’s Tech Stocks To Beat The S&P: 14 Top AI & Non-AI Stocks

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

Number of Hedge Fund Holders In Q3 2024: 235

NTM EPS Estimate: $24.35

Meta Platforms, Inc. (NASDAQ:META) is the world’s largest social media company. The firm operates Facebook, which allows it to have a whopping 3.2 billion users in its network. Additionally, its Instagram image-sharing service and WhatsApp communications platforms are among the most widely used in the world. Meta Platforms, Inc. (NASDAQ:META)’s indisputable moat in the social networking industry has also allowed it to generate considerable financial resources and use them to establish a foothold in the artificial intelligence industry. It is one of the handful of players in the AI industry with access to an in-house foundational AI model. Called Llama, Meta Platforms, Inc. (NASDAQ:META) competes through it with other AI giants like Google and Microsoft. As it has also invested billions into AI like its peers, the firm’s hypothesis is dependent on its ability to monetize its AI services offered to advertisers and users on its platforms. The AI services include AI campaign management and other platforms.

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 cyclical stock Wells Fargo is confident about. 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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