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Meta Earnings: Impressive Growth and Big Plans for AI
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Meta Platforms ((META - Free Report) ) reported earnings Wednesday after the close beating analysts’ estimate and displaying continued strong growth for both the top and bottom line. Revenues grew 22% YoY, total daily active users (DAUs) grew 7% YoY to 3.27 billion, and the company repurchased $26 billion of shares.
There is a lot to like about META stock including impressive growth, strong stock price momentum, a relatively discounted valuation and further long-term tailwinds from AI integrations.
Compared to the other members of the Magnificent 7, as well as many other stocks in the market, I believe Meta Platforms remains a stock to consider buying.
Meta Beats Earnings Estimates and the Stock Advances
We saw earnings over the past week from fellow Magnificent 7 members Microsoft ((MSFT - Free Report) ) and Alphabet ((GOOGL - Free Report) ), where the reception from wall street was not quite so ebullient. Although both Microsoft and Alphabet reported broadly strong earnings results, investors were critical of excessive capex spending on AI, which they fear will show little actual profit.
But Meta on the other hand appeared to show a more cohesive long-term plan for its AI integrations than Microsoft and Alphabet at the recent earnings meeting.
On the earnings call, CEO Mark Zuckerburg shared a litany of exciting and real uses for AI on its platforms, but one in particular really stood out to me. He noted that they were going to be using AI to empower advertisers by evolving from targeting specific audiences to generating personalized creative content. Previously, advertisers targeted specific demographics, but AI can now predict interested users more accurately.
AI will generate and personalize ad content based on business objectives and budgets provided by advertisers, automating the entire process incrementally. This seems like a huge deal to me.
Meta Platforms stock is up 4% on the day as of this writing while the broad market averages are down 2-3%.
Meta Stock Remains a Huge Market Outperformer
Meta Platforms has been a steady outperformer this year as well as over the last two-, five- and 10-year period. This year the stock is up 57% YTD and over the last decade it has appreciated at a compound annual growth rate (CAGR) of 21%, almost double the S&P 500’s 11.6% CAGR.
Image Source: Zacks Investment Research
Technical Momentum Pattern Building in Meta Shares
Speaking of strong relative performance, the price action in META is also forming a bullish technical pattern. As of now, we see a very clear and simple bull flag which we can use to make a trade.
Currently, the price is sitting right in the middle of the consolidation and although I am mostly bullish, am open-minded to anything happening. So, if the stock breaks below the level of support at $450 it may be worth waiting for another opportunity.
But if the stock can break out above the $540 level of resistance, it would signal a technical breakout and likely draw in more buyers sending the stock higher.
Image Source: TradingView
META Shares Trade at a Historical Discount
Even with the tremendous stock price appreciation META has experienced, the stock still boasts a very fair valuation thanks to the equally strong growth in earnings.
META is trading at a one year forward earnings multiple of 23.5x, which is below its 10-year median of 25.2 and just above the market average.
Image Source: Zacks Investment Research
Should Investors Buy Meta Stock Now?
I really believe that Meta Platforms is one of the most appealing mega cap tech stocks in the group and more broadly among the whole market. It is still growing rapidly even at its mammoth size, is quick to iterate new trends and returns heaps of cash to shareholders.
Finally, I find that Mark Zuckerberg appears to be the most laser focused and committed CEO of the mega Cap tech stocks as he is the only founder to remain at the helm. He has dealt with blunders in the recent past like his Metaverse investments and continues to learn from mistakes and roll with the punches.
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Meta Earnings: Impressive Growth and Big Plans for AI
Meta Platforms ((META - Free Report) ) reported earnings Wednesday after the close beating analysts’ estimate and displaying continued strong growth for both the top and bottom line. Revenues grew 22% YoY, total daily active users (DAUs) grew 7% YoY to 3.27 billion, and the company repurchased $26 billion of shares.
There is a lot to like about META stock including impressive growth, strong stock price momentum, a relatively discounted valuation and further long-term tailwinds from AI integrations.
Compared to the other members of the Magnificent 7, as well as many other stocks in the market, I believe Meta Platforms remains a stock to consider buying.
Meta Beats Earnings Estimates and the Stock Advances
We saw earnings over the past week from fellow Magnificent 7 members Microsoft ((MSFT - Free Report) ) and Alphabet ((GOOGL - Free Report) ), where the reception from wall street was not quite so ebullient. Although both Microsoft and Alphabet reported broadly strong earnings results, investors were critical of excessive capex spending on AI, which they fear will show little actual profit.
But Meta on the other hand appeared to show a more cohesive long-term plan for its AI integrations than Microsoft and Alphabet at the recent earnings meeting.
On the earnings call, CEO Mark Zuckerburg shared a litany of exciting and real uses for AI on its platforms, but one in particular really stood out to me. He noted that they were going to be using AI to empower advertisers by evolving from targeting specific audiences to generating personalized creative content. Previously, advertisers targeted specific demographics, but AI can now predict interested users more accurately.
AI will generate and personalize ad content based on business objectives and budgets provided by advertisers, automating the entire process incrementally. This seems like a huge deal to me.
Meta Platforms stock is up 4% on the day as of this writing while the broad market averages are down 2-3%.
Meta Stock Remains a Huge Market Outperformer
Meta Platforms has been a steady outperformer this year as well as over the last two-, five- and 10-year period. This year the stock is up 57% YTD and over the last decade it has appreciated at a compound annual growth rate (CAGR) of 21%, almost double the S&P 500’s 11.6% CAGR.
Image Source: Zacks Investment Research
Technical Momentum Pattern Building in Meta Shares
Speaking of strong relative performance, the price action in META is also forming a bullish technical pattern. As of now, we see a very clear and simple bull flag which we can use to make a trade.
Currently, the price is sitting right in the middle of the consolidation and although I am mostly bullish, am open-minded to anything happening. So, if the stock breaks below the level of support at $450 it may be worth waiting for another opportunity.
But if the stock can break out above the $540 level of resistance, it would signal a technical breakout and likely draw in more buyers sending the stock higher.
Image Source: TradingView
META Shares Trade at a Historical Discount
Even with the tremendous stock price appreciation META has experienced, the stock still boasts a very fair valuation thanks to the equally strong growth in earnings.
META is trading at a one year forward earnings multiple of 23.5x, which is below its 10-year median of 25.2 and just above the market average.
Image Source: Zacks Investment Research
Should Investors Buy Meta Stock Now?
I really believe that Meta Platforms is one of the most appealing mega cap tech stocks in the group and more broadly among the whole market. It is still growing rapidly even at its mammoth size, is quick to iterate new trends and returns heaps of cash to shareholders.
Finally, I find that Mark Zuckerberg appears to be the most laser focused and committed CEO of the mega Cap tech stocks as he is the only founder to remain at the helm. He has dealt with blunders in the recent past like his Metaverse investments and continues to learn from mistakes and roll with the punches.