Meta Platforms Leads Ad Rebound Thanks To?AI

Aug. 31, 2023 1:17 AM ET Meta Platforms, Inc. (META)

Summary

• Meta Platforms has outperformed other digital advertisers in the rebound of the advertising industry, thanks to its efforts in AI.
• While peers like Google and Snap either utilize the wrong AI strategy or don’t have one, Meta’s headstart has shown across multiple time frames.
• Combined with Meta’s undervaluation compared to peers, the risk for the growth seen is minimal as the company finds its ROI.
• Meta’s bullish thesis strengthens, while any bullish thesis I had with Google or Snap diminishes.

In this article, the author discusses the performance of Meta Platforms, Inc. (META) in the advertising industry’s rebound, attributing its success to its efforts in artificial intelligence (AI). The key points of the article are as follows:

1. Meta’s AI Strategy: The article highlights Meta’s effective use of AI in both user and advertiser experiences, which has propelled it ahead of competitors like Google and Snap in the advertising rebound.
2. Strong Q2 and Q3 Guidance: Meta’s outperformance is reflected in its Q2 results and guidance for Q3, where it anticipates revenue growth pushing back into the 20% range.
3. Comparison with Peers: The article compares Meta’s robust growth with Google and Snap, which have experienced tepid growth in recent quarters.
4. Investments in AI: The author emphasizes Meta’s strategic investments in AI and how they are positively impacting its recommendation features and ad targeting capabilities. Meta’s AI solutions are directly improving its core advertising business.
5. Revenue Growth Comparison: The article provides a comparison of revenue growth percentages for Meta, Google (Ad Business), and Snap, highlighting Meta’s significant acceleration in growth.
6. Differing AI Strategies: The author discusses how Meta’s AI strategy focuses on improving user experiences and helping advertisers create better ads. In contrast, Google’s approach is seen as less effective, treating advertisers and users similarly.
7. Potential and Valuation: While acknowledging potential risks, the article suggests that Meta’s relatively low valuation compared to peers minimizes the risk associated with its growth.
8. EPS and Valuation Comparison: Meta’s forward P/E ratio is lower than Google’s, despite higher growth expectations, indicating a favorable risk-reward setup for Meta.
9. Bullish Stance on Meta: The author expresses a bullish stance on Meta, highlighting the company’s successful AI investments and the expectation of continued growth. They do not anticipate Google finding its way with its current AI strategy for advertising.

In summary, the article praises Meta Platforms for its strong performance in the advertising industry, driven by its AI investments, and suggests that the company’s growth potential outweighs the associated risks. The author also indicates a shift in their thesis away from Google and Snap in favor of Meta.

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