Meta Platforms META shares have returned 66.5% year to date, underperforming the Zacks Computer & Technology sector’s return of 30.4% and the Zacks Internet Software industry’s appreciation of 30%.
Except for NVIDIA NVDA, it has outperformed the rest of “Magnificent 7” over the same time frame. The group includes Alphabet GOOGL, Amazon, Microsoft MSFT, NVIDIA, Apple and Tesla, apart from META.
YTD, NVIDIA, Amazon, Tesla, Alphabet, Apple, and Microsoft returned 198.1%, 37%, 29.3%, 27.7%, 17.9% and 12.4%, respectively.
Meta Platforms’ focus on leveraging AI to improve user engagement is a key catalyst. The launch of a unified video player and improved AI-powered recommendation has increased time spent on Facebook by 8% and 6% on Instagram.
Image Source: Zacks Investment Research
AI is helping META retain advertisers who are leveraging its generative AI-powered image expansion, background generation, and text generation tools to boost business. META estimates that businesses using Image Generation are seeing a 7% increase in conversions.
Meta Platforms’ advertising revenues (98.9% of Family of Apps revenues) increased 18.6% year over year to $39.89 billion and accounted for 98.3% of third-quarter 2024 revenues. At constant currency, revenues increased 23% year over year.
AI is heavily dependent on data, of which META has a trove, driven by its more than 3.2 billion daily users. Meta Platforms has been leveraging AI to improve the potency of its platform offerings, including WhatsApp, Instagram, Messenger and Facebook.
Its staggering reach and increasing ad impressions (up 7% year over year in the third quarter of 2024) make META one of the most important players in the digital ad sales market, apart from Alphabet.
Meta Platforms is leveraging AI to boost Facebook’s appeal among young adults, a demography that used to prefer YouTube and Snapchat. It has launched new features for Facebook users, particularly young adults (18-29-year-olds), to access and discover content beyond their close friends.
The launch of Teen Accounts that limit who teens are messaging and what content they can see has added an extra layer of protection for teenagers, making the platform much safer.
Meta Platforms launched Matchmaker, a new feature on Facebook Dating that allows users to invite up to five friends to swipe for potential matches on their behalf.
Threads now has more than 275 monthly actives, and META expects Engagement to be its next major social app.
META has started rolling out Meta AI and is on track to achieve its goal of becoming the most used AI assistant by the end of the year. Meta AI currently has more than 500 monthly actives.
META’s Llama family of foundation models has been a game changer. Llama token usage has grown exponentially in 2024. The Llama 4 models, expected to be released next year, will offer new modalities, capabilities and stronger reasoning. It is anticipated to be much faster than Llama 3 models.
Availability of Llama in U.S. government agencies is expected to boost adoption. Meta Platforms is bringing Llama to government agencies through its partnerships with Accenture Federal Services, Amazon Web Services, Anduril, Booz Allen, Databricks, Deloitte, IBM, Leidos, Lockheed Martin, Microsoft, Oracle, Palantir, Scale AI and Snowflake.