Meta Platforms, Inc. (META)

Zuckerberg is betting the farm on AI. We'll see if it turns out. Getting top scientists to work on it and paying them top dollar. Implemented a lot of this technology in-house to optimize ad platform. Key metric is Return on Advertising Spend (ROAS). If GOOG Search volume is dropping, Facebook and Instagram are destinations for people to consume content.

Incredibly strong free cashflow. Going open source, which gives developers lots of buy-in. Glasses opportunity is really attractive. Whoever wins the always-on device race will really win.

Just reported. Easily beat EPS and revenue, sharply better than any expected, and gave a very optimistic forecast, including lower expenditures.

It reports Wednesday. They're crushing it with Instagram advertising. Will they do the same with Whatsapp?

It was his top pick heading into 2025. It's not just AI, but also hardware and advertising--they monetize AI through advertising. Margins are rising. He expects great numbers.

Is fine as long as they take their juicy cash flow and remain disciplined, or they spend a lot here and there, which will not be good. They report soon. She doesn't feel they are overspending on AI.

Still owns it. The market liked what Meta said on the ad front, where clients can create their own ads with tools that Meta supplies--a game changer.

He would not buy as a value investor since the valuation is reasonably full, unless AI gives them a big edge. It has executed very well and is a cash flow machine. The main source of income is advertising and ad spending tends to go down in an economic slowdown.

He has been buying tech during this dip, in April particularly. We will eventually exit this volatility and find stability and confidence in the market again. Meta and Microsoft are some of his key holdings, and they affirmed their capex guidance--they are spending to make incredible investments over the next three years, because they know AI is the biggest super-cycle every in technology. There is incredible pent-up demand for AI from businesses and consumers. The CEO of MSFT reported that his company processed 50 trillion tokens last month alone, or 3.5 million years of AI conversation. 

META has a dominant market position in social media, its monthly active users exceeds 3 billion, and it is investing in AI. It is a cash flow machine, generating $52B in free cash flow over the past 12 months, it has grown sales by 19% over the past 12 months, and earnings growth is 47% over the past 12 months. It is currently priced at 23.7X forward earnings, which for a company rapidly growing sales and earnings, we feel is fairly cheap, although it can be cyclical depending on enterprise ad budgets.
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They reported a strong quarter after the bell: 37% YOY EPS growth and 19% YOY revenue growth. Q1 revenues beat as ad sales did not disappointment. Q2 guidance was in-line, and they raised their capex (which will benefit Nvidia).

They report Wednesday. Many are worried about their ad business, but he isn't.

It appears to have little exposure to tariffs, because they sell advertising, but this could be a target of EU tariff retaliation or if the trade war leads to recession. Is -30% from highs, and these fears are baked into the stock. Trades under only 20x PE.

It's a pure ad play and ads struggle in a slowdown. He worries about its AI platform--others are better.

The stock has made a bit of a 'round trip' from its recent highs but considering its strength, market share, financial position and growth, at 23X earnings (with $77B cash) we think it is buyable for investors who can look beyond the current market volatility (which will end, one day). 
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