Currently boasting strong financials and a 3-billion person user-base, Meta Platforms (NASDAQ:META) has now evolved into a global holding company, owning not only Facebook but Instagram and WhatsApp. In its Q1 2024 earnings report, Meta brought in $36.46 billion in revenue, impressing investors and the market.
Although capital expenditures spiked $6.72 billion this past quarter, its $12.53 billion free cash flow makes the company reliable in how they manage their finances. Meta has been actively adapting to change, innovating its products and services through AI research labs, The company aims for seamless integration between AI universes and real-life.
On July 31 (after market close), Meta will be releasing its Q2 2024 earnings report. Here are some important details to help investors decide if should buy META ahead of its announcement.
Q2 2024 Earnings
Investors will be intently focused on today’s earnings call for additional clarity around the company’s AI updates and how they will translate into top- and bottom-line earnings. The company’s revenue is expected to reach $38.85 billion, with a projected net income of $12.31 billion. These numbers emit confidence in a strong ad environment, as well as strength with the company’s ad products and Instagram Reel adoption.
A Wedbush survey indicated most advertisers plan to maintain or increase spending on Meta platforms, suggesting strong Q2 results and a positive outlook. Earlier this year, Meta expanded its AI tools for advertisers.
Open Source AI
Over time, tech companies are now more focused on open-sources. With Linux gaininig popularity due to its affordability, modifiability and advanced features, it has become the industry standard for cloud computing. Similarly, AI is following this path.
Mark Zuckerberg, founder of Facebook and CEO of Meta, championed open-source AI in his open letter “Open Source AI is the Path Forward,” opposing OpenAI and other large players in this spacee. Open-source software, like Linux and Apache, allows for public access to program code for modification. However, this software also faces challenges in project maintenance, quality consistency, contributor management and financial sustainability.
While tech companies currently develop leading closed models, open-source models like Llama are closing the gap. Llama 2 was comparable to older models, but Llama 3 is now competitive and even leading in some areas, promising future dominance in AI advancement, openness, modifiability and cost efficiency.
Meta launched Llama 3.1 405B, the first frontier-level open-source AI model, along with improved 70B and 8B models. Collaborating with major companies, Meta aims to make Llama the industry standard, promoting AI benefits through broad accessibility and support.
More Room to Grow
Meta integrated its Meta AI into Facebook, Instagram and WhatsApp, enhancing user engagement and reducing advertisers’ cost-per-click by 28%. However, during the last earnings call, Meta indicated AI monetization could take years, leading to a 10% stock drop. The quick recovery suggests untapped value, and long-term AI investments are expected to benefit shareholders.
With Meta’s earnings call tonight, the stock is rated a “buy” for the year’s second half. Its social media dominance, with 3.24 billion daily users, and AI developments promise future revenue growth. Trading at a low multiple compared to peers and having strong cash flow for dividends and buybacks, META stock remains one of my top growth picks heading into earnings this quarter.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
