With the surge of artificial intelligence (AI), the “Magnificent Seven” stocks have become the focal point of discussions in the stock market. Bank of America analyst Michael Hartnett identified these seven American tech giants – Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA) – as top contenders in this list. While the AI wave has propelled their growth, the appeal of these companies extends beyond AI, reflecting innovation, profitability, and market dominance.
Despite mixed performances among these stocks in 2024, Meta Platforms (NASDAQ:META), formerly Facebook, stands out with notable gains, outperforming the S&P 500 Index. Let’s delve into why Meta might be the standout choice among the “Magnificent Seven” stocks to consider investing in now.
Meta Platforms’ Ascension to the Trillion-Dollar Club
Meta Platforms’ market cap has soared to $1.3 trillion, cementing its position in the trillion-dollar club alongside other tech titans. Initially recognized for its flagship platform Facebook, Meta now boasts an array of widely used social media platforms, including Instagram, WhatsApp, Messenger, and Threads. With over 3.1 billion users across its applications, Meta commands immense consumer loyalty, driving robust revenue and profit growth.
In its latest earnings report, Meta’s Family of Apps segment, comprising its social media platforms, generated $39.0 billion in revenue, contributing 97% of total revenue. Despite challenges in its metaverse-focused Reality Labs segment, Meta witnessed a significant revenue increase in Q4, driven by strong sales of its mixed reality headset, Quest 3.
Expanding AI Capabilities and Revenue Growth
Meta Platforms continues to innovate with AI-powered products like the Ray-Ban Meta smart glasses and generative AI stickers. Moreover, its Reality Labs segment is poised to capitalize on the burgeoning metaverse market, expected to reach $1.3 trillion by 2030. The company also sees potential monetization opportunities in platforms like WhatsApp Business and Threads.
As a dominant player in the social media landscape, Meta relies heavily on advertising revenue, which reached $131.9 billion in 2023. With expectations of an ad market recovery, Meta is poised for further revenue growth. Moreover, the company’s robust financial position, with significant cash reserves and a newly announced dividend and share repurchase program, underscores its commitment to shareholder value.
Analysts’ Outlook and Conclusion
Analysts project Meta Platforms’ revenue to grow by 17% year-over-year in 2024, with substantial earnings per share (EPS) growth. Despite trading at a reasonable forward earnings multiple compared to peers, Meta’s stock offers compelling long-term AI opportunities. While other “Magnificent Seven” stocks also demonstrate rapid expansion and AI-driven growth, Meta Platforms stands out as a promising investment choice.
With a majority of analysts endorsing Meta stock with a “strong buy” rating, and a price target close to its current trading price, Meta Platforms remains an attractive investment option. As Meta continues to harness its AI capabilities and explore untapped segments, it presents significant growth potential for investors seeking long-term value in the tech sector.
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Author Faith Yakubu 
