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Meta Platforms (META) is reworking its long term story by cutting back on metaverse projects, redirecting capital into AI infrastructure and smart glasses, and bringing Dina Powell McCormick into a senior AI focused leadership role.
See our latest analysis for Meta Platforms.
Those AI heavy announcements are landing against a softer share price backdrop, with a 90 day share price return of 15.41% and a year to date share price return of 4.64%. This comes despite a 1 year total shareholder return of 1.54% and a very large 3 year total shareholder return close to 7x, which points to momentum cooling after a strong multi year run as the market reassesses higher capital spending and execution risks around AI and smart glasses.
If you are tracking how AI stories like Meta’s are affecting other names, it could be worth scanning high growth tech and AI stocks as a way to spot similar themes playing out across the market.
With Meta shares down over the past quarter and year to date, yet still sitting on a multi year return above 3x, are investors being offered an AI reset at a discount, or is the market already baking in years of growth?
According to the most followed narrative, Meta’s fair value sits above the recent US$620.25 close, which frames the current AI spending cycle in a different light.
Meta’s Q3 2024 results present a company aptly juggling growth, efficiency, and investing for the future. Prudent cost management and strategic geographic expansion underlined its resilience in the core ad business. Meanwhile, Meta continues to invest heavily in AI and the metaverse, a premeditated risk taken to secure its position at the forefront of the next wave of digital innovation.
Read the complete narrative.
Want to see how this pricing gap is built? The narrative leans on robust margins, firm revenue growth and a premium profit multiple that assumes lasting cash generation. Curious which exact levers carry the most weight in that fair value math?
Result: Fair Value of $723.11 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, there are clear pressure points here, including Reality Labs losses and rising AI capital spending, which could compress margins or trigger sharper regulatory scrutiny.
Find out about the key risks to this Meta Platforms narrative.
If you look at the numbers and reach a different conclusion, or simply want your own angle on Meta’s story, you can build a fully personalised view in just a few minutes, starting with Do it your way
