10 Jim Cramer Stocks to Watch as US-China Prepare to Begin Talks

3. Meta Platforms Inc (NASDAQ:META)

Number of Hedge Fund Investors: 235

Jim Cramer in a latest program on CNBC talked about the results of Meta Platforms:

“Last night, the bears were trampled to death when both Microsoft and Meta Platforms Inc (NASDAQ:META) revealed they were totally on board with continuing to spend big on the data center. Microsoft’s data center constraint. Mark Zuckerberg at Meta Platforms Inc (NASDAQ:META) says he needs to keep spending because it’s just so lucrative to do so. It’s simple, it’s necessary if big money is going to be made monetizing his Met AI site, which he’s so crazy about.”

Meta Platforms Inc (NASDAQ:META) biggest strength remains its huge user base, which continues to grow despite record levels. The company has 3.43 billion monthly active users as of March, up 6% year over year. This equals about half of the world’s total population, giving the company immense power for monetization and data processing. The company also raised its capex guide for the year from $60-$65 billion to $64-$72 billion, crushing concerns about an AI and data center slowdown.

Another overlooked element in Meta Platforms Inc (NASDAQ:META) business is its ads growth. The company, which depends on advertising for 98% of its revenue, is growing at a rate of 21% YoY. In comparison, Google Search grew by 9%, while Alphabet’s overall business, including Cloud and Services, expanded by 12%. Even YouTube’s year-on-year growth stands at 11%, well below Meta Platforms Inc (NASDAQ:META) rate.

Given Meta Platforms Inc (NASDAQ:META) current growth, Wall Street’s estimates of 21% EBIT growth and 18% OCF growth seem conservative compared to the tailwinds the company is benefiting from right now.

Nightview Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:

“Core Opportunity: Meta Platforms, Inc.’s (NASDAQ:META) platforms—Instagram, Facebook, WhatsApp, and Messenger—reach nearly half the world’s population daily, making it one of the most powerful advertising ecosystems globally. With investments in AI and augmented reality (AR), we believe Meta is also creating significant optionality for long-term growth.

Competitive Advantage: Thriving Core Platforms: In Q3, we saw Meta achieve a 23% YoY revenue growth,—a testament to strong user engagement across its ecosystem. The advertising landscape as a whole continues to evolve and we believe Meta’s existing platforms offer a defined advantage in this new world. Existing platforms in the age of AI continue to be the most powerful indicator of future success in our opinion.

AI Leadership: Meta’s AI capabilities and the Llama AI model are driving efficiency and product innovation. In our view, these assets have been under-appreciated by the market while enhancing Meta’s ability to further scale and innovate its leading advertising business…” (Click here to read the full text)