Meta Platforms, Inc. (META)

They reported today a big top and bottom line beat and though they will spend big on capex, manager is confident it can still grow operating income. Shares are up after hours.

It reports this week. It fell 11% the last time it reported and is -16% since August's highs. Is selling under 23x PE, cheap, but to turn around it needs a new catalyst. He expects them to report great numbers, especially their core ad business. But last time they reported strong numbers and it didn't matter, because Wall Street only cared that they raised their capex to fund a massive data centre build-out--which crushed the stock. So, when they report, the big question is, How much are they spending? Meta needs to show how their AI spending is paying off?

It reports Wednesday. Last quarter, CEO Zuckerberg said he would spend all he can on capex, but this time can he at least explain how he's making on the data centre build-out?

A little concerned. Last May-October the stock soared because their ad business was taking off with stellar revenue growth. Problem is Meta is adding a lot of debt, and it lacks a cloud business unlike peers like Google and Amazon. Meta is in the penalty box because their core AI model hasn't shown improvement, but they have hired an all-star development team. 

One in two human beings uses their products, incredible reach. This is a juggernaut. Is historically trading at an attractive 21x PE, though is 15% off its highs over fears they aren't dominating the AI race. But CEO Zuckerberg is competitive.

A Mag 7 that didn't do all that much over the last 12 months. Trading at 22x forward PE with about 14-15% growth. Decent PEG ratio. Stock's just slightly below 200-day MA, but that MA continues to move higher. Will be at the forefront of the AI tech revolution.

There's no better person to opine on the future of social media than a 55-year-old portfolio manager ;)  Has 3B monthly active users, yet his children say they don't know these people. His firm is actually using META more to make people aware of the firm's presence. Potential AI winner.

Added on recent pullback, remains one of her core long-term growth holdings. Key story is engagement, now reaching ~3.5B people daily. Operating margins still ~40%. AI is reinforcing its core business, even if spending stays elevated in near term (which pressures margins short-term). AI is improving how ads are targeted and priced, and is opening new monetization paths.

Regulatory risk to heavy capital spending, but scale, data, and cash generation gives it room to invest through the cycle. Rates 9/10 on fundamentals. Now has ~5% weight, and would trim once it reaches target price. Analysts' price target is about 26% upside from here.

His top holding. Meta dominates in social media with 3.5 billion users. The PE is high, so wait for a pullback. 

Would rather own Meta or Nvidia than Amazon, because the former have better multiples and earnings growth (for 2026).

Phenomenal business. Within the ad space, he owns GOOG as his go-to name. Large-cap tech has had a fantastic run on premise of what AI will be in the future -- too early to see how that will play out. 

If you own this name, just sit tight and let things play out. Great financial structure and lots of free cashflow.

There are going to be hiccups along the way, think of the volatility in tech over the last 4 years. Markets are reacting faster and faster due to ETFs and algorithmic trading -- take advantage of that when you can. If you find a name like META that you like, with great business economics and a more-or-less essential tech name, watch and wait for a bit of a pullback. 

Every other person on the planet uses a Meta app or device, powerful, an advertising engine. He likes and doesn't like the leadership, which is bold, namely the metaverse which he has never understood. But they pivoted when the metaverse didn't work. It was good that the CEO pivoted and didn't stay the course.

Is up 11% this year. Trades at 22x 2026 PE, cheap. Is spending huge on capex on data centres and power plants but have to in order to keep up with competitors.

It is probably one of the Magnificent 7 that is most vulnerable to a recession since most of its revenue comes advertising and that's the first expense to cut for companies.. When rates went up before, META went down.

It is a great company and the advertising business has upside. He feels that if Trump loses the mid-terms, big tech could drop substantially. Don't chase it - wait for a correction.