Stock Up 22% from Last Month's Low
"AI Impact Proven... Average Revenue per User Increases"
Meta Platforms (Meta), the parent company of Facebook, is reported to be the biggest beneficiary in the field of artificial intelligence (AI) and is relatively undervalued among big tech companies.
On the 11th (local time) in the New York stock market, Meta closed at $719.80, up 22.46% from last month's low. Meta's market capitalization, which has risen for 16 consecutive trading days, approached $2 trillion. According to data compiled by Bloomberg, Meta's continuous rally is the longest stock price rally within the Nasdaq 100 index since 1990.
This strong performance of Meta contrasts with its competitor Alphabet in the online advertising market. Alphabet plunged nearly 7% after announcing disappointing earnings on the 4th.
Jim Polk, Chief Equity Investment Officer at Homestead Advisors, said, "Meta is proving that its AI-related capital expenditures (CAPEX) are effective, putting it ahead of competitors," adding, "This is why investors continue to flock to Meta." On the other hand, Alphabet must prove the effectiveness of its AI investments and provide investors with confidence that it can maintain its market share in search.
Meta's recent growth contrasts sharply with the situation a few years ago when the company was in crisis. At that time, CEO Mark Zuckerberg changed the company name from Facebook to Meta and presented a metaverse-centered strategy, but investors doubted its ability to generate profits and were disappointed.
Many of those concerns have recently been largely resolved. Conrad van Tienhoven, Portfolio Manager at Riverpark Capital, analyzed, "Meta has increased average revenue per user by improving ad targeting and measurement methods using AI."
Bloomberg forecasted, "Meta's revenue growth rate is expected to increase by about 15% this year. Furthermore, net profit growth is projected to grow from 6.2% this year to 15% by 2026." It also evaluated, "Meta remains one of the relatively undervalued stocks among big tech. The current price-to-earnings ratio (PER) of 27 times is similar to that of the Nasdaq 100 index."
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