The trajectory of Meta Platforms (NASDAQ:META) stock has garnered significant investor approval in recent quarters. Despite undergoing a correction of 14.5% from its peak in late July, the shares have still managed to maintain a remarkable ascent of over 216% since the lows observed in November of the previous year. Notably, the recent dip in stock value could potentially offer an advantageous entry point for investors who previously missed out on the substantial upward momentum.
While Meta’s prospects appear promising – having exceeded earnings projections for consecutive quarters and embracing the realm of artificial intelligence (AI) – it’s challenging to overlook the substantial extent of the stock’s multiple expansions during the recent months. As of the present writing, META stock is trading at 36.9 times the trailing price-to-earnings ratio. Reflecting on this, it’s worth noting that less than a year ago, the stock’s price-to-earnings ratio was confined to the teens.
The pace at which the valuation has outpaced earnings growth is evident, yet the premium valuation of Meta stock appears justified. This valuation aligns with the company’s transition from a “Year of Efficiency” to a potential year marked by renewed growth, supported by cutting-edge technologies. Ranging from augmented reality (AR) eyewear to advancements in generative AI, Meta Platforms boasts a suite of growth catalysts that could facilitate the convergence of earnings and the currently elevated stock price.
The portfolio of innovative ventures attributed to Meta justifies its premium valuation. With a demonstrated ability to translate inventive concepts into tangible profits, there’s a credible argument that the shares could appreciate significantly in the forthcoming months and quarters. As investors come to recognize the potential of these innovations in augmenting or reshaping the existing platforms and social media applications, the value of Meta Platforms could be poised to rise substantially.
Meta Platforms: A Potential AI Trailblazer in 2024
Following a lackluster performance in 2022, investor enthusiasm for Meta’s shares has resurged swiftly. After undergoing substantial workforce reductions, the company is primed to ride the wave of AI adoption, potentially even surpassing the achievements of some of its tech counterparts.
Undoubtedly, AI has been the focal point of 2023, yet the year 2024 presents a pivotal question: which companies can effectively translate AI technologies into tangible revenue streams? While it seems that nearly every organization has ventured into AI, only a select few possess the capacity to convert AI innovation into substantial sales and profits, and Meta Platforms stand out as one such contender.
Beyond possessing an impressive array of technological talent, Meta benefits from an extensive network to showcase its latest AI advancements, coupled with its proficiency in monetization. Eventually, investors will demand growth in earnings driven by AI, not mere promises for the distant future. While external factors such as rising interest rates might be implicated, AI enterprises must substantiate their claims with concrete results after almost a year of anticipation. Indeed, Nvidia (NASDAQ:NVDA) serves as a testament that AI transcends mere buzzwords or fleeting trends; it’s a growth engine capable of propelling companies beyond lofty expectations.
In recent times, Meta unveiled the latest iteration of its generative AI chatbot, the second version of the Large Language Model Meta AI (LLaMa). This iteration reportedly developed in collaboration with Microsoft (NASDAQ:MSFT), is open source and represents a contender in the race among various chatbots aiming to outperform OpenAI’s ChatGPT. While the LLaMa 2 may not have decisively triumphed in the AI competition yet, it presents itself as a viable contender that long-term investors might consider supporting.
For the time being, the LLaMa 2 will not leverage Meta’s extensive data repository drawn from its array of social media applications, including Facebook, Instagram, and Threads. While Meta does possess a notable data advantage, exercising caution in opening the floodgates of data appears wise. It’s evident that Meta has learned from its past missteps.
Meta’s Intriguing Path with AR Glasses
As Meta continues its substantial investment in AI, the company is concurrently forging ahead with its roadmap encompassing augmented reality (AR), virtual reality (VR), and the metaverse. Reports indicate that the company is in the process of producing approximately 1,000 new AR glasses slated for release in 2024. These smart glasses represent a significant leap beyond the bulkier headsets of the past. Nevertheless, several sources suggest that a 2024 launch might be slightly overly ambitious.
With Apple (NASDAQ:AAPL) gearing up to introduce its inaugural AR device in the United States early the following year, it’s undeniable that Meta aims to outshine its long-standing FAANG rival by introducing a product that surpasses the competition. However, in a year poised to be rife with transformative moments akin to those driven by the iPhone, I remain uncertain whether CEO Mark Zuckerberg can effectively upstage Apple.
Evaluating Meta Stock
While Meta’s stock valuation currently appears elevated, the potential for even further appreciation looms if AI innovations materialize as envisaged. This holds true even if the forthcoming AR glasses were to falter in their performance.
Featured Image: Unsplash
Author Faith Yakubu 
