Meta just reported one of the most impressive quarters I have ever seen in 8+ years.
Congrats to @Aron and @Magaly for pointing out the difference between search and social media and correctly predicting a strong quarter.
While Aron is going to report numbers and details of the conference call, here are two highlights I want to mention
- Meta is actively working on general intelligence and models that can “reason, plan, code, remember and many other cognitive abilities”. The company appears to be running & performing extremely well on all fronts.
Here is what they imagine:
Everyone who uses our services will have a world-class AI assistant to help get things done, every creator will have an AI that their community can engage with, every business will have an AI that their customers can interact with to buy goods and get support, and every developer will have a state-of-the-art open-source model to build with.
- Impressive growth in the quarter, but more importantly, a very strong outlook for Q1 makes EPS of $20 in 2024 achievable. Furthermore, Meta wants to maintain its financial discipline even if it continues to grow in the future, which could lead to margin expansions and EPS of $30+.
Assessment
I continue to believe that Meta is extremely well positioned for AI given the large number of people that are spending hours in their apps while liking, scrolling, messaging, saving content and giving other kinds of signals to their AI. In fact it is probably the company which is worldwide best positioned for training inputs.
Here are Meta’s comments about it
But even more important then the upfront training corpus is the ability to establish the right feedback loops with hundreds of millions of people interacting with AI services across our products. And this feedback is a big part of how we’ve improved our AI systems so quickly with Reels and Ads.
Therefore, I think the stock still holds significant fundamental upward potential. In addition, it could get ahead of its fundamental valuation at one point and reach “bubble territory,” given that the AI narrative is so compelling. In that regard, I found Meta’s comments that they want “additional flexibility” on how to distribute capital with dividends interesting, as it does not make sense to buy back shares if the stock is overvalued.