Key insights
- The analyst views Meta (META) favorably, highlighting its strong financial metrics, AI integration, and growth in its advertising business. Despite recent technical weakness, the company's forward P/E of 19x, coupled with catalysts like a subscription model and potential cloud ventures, suggests significant upside. The analyst sees potential buying opportunities if the stock dips to the low $500s, indicating a bullish outlook on its future performance and market position.
META is one of those names that are either really loved or really hated by people on the internet. And you don’t really see anybody in the middle.
I like META just because I see the numbers. They are a major AI beneficiary trading 21x earnings with forwarded P/E at 19x. They are also a cash machine for their size: 1.5T market cap / 125B topline / 50B FCF (and that’s TTM numbers with the 75B TTM CAPEX numbers).
And I’m not throwing “AI beneficiary” as a buzzword here.
The Lattice architecture drove the user retention to hit a 4-year high. I’ll use q1 2026 numbers as reference: instagram reel watch time grew 10% yoy/ facebook video watch time grew 9% yoy (and overall FOA ad impression grew 19% yoy)
Meta’s ad business also really gets the job done: so much so that it had a 12% increase in average price per ad yoy.
If you put ad impression growth and price growth together, FOA grew 33%. This isn’t the “dying business” kind of growth for sure.
And recent news has been nothing but good news: such as the new subscription based model is estimated to bring in a 2-3B ARR / Jensen Huang said “nobody uses AI better than META” / & other potential catalyst that I couldn’t really come up with a number yet but could really expand the multiples: new cloud computing business, data center leasing.
All of that and it’s still trading at 19x Fwd P/E. The only caveat is the momentum isn’t looking too good as the chart recently lost a major support at $600. Personally, if I see the stock capitulate to the low 500s, I’d size up heavily on it.