Meta Platforms (NASDAQ:META) stock witnessed a remarkable turnaround in the 2023 fiscal year, highlighted as the ‘’year of efficiency.’’ Their dominance in social media and advertising continues, and they’re on pace to become a leader in the AI revolution.
All of the mega cap technology companies are competing to be the top dog in generative AI services. Finally, Meta anticipates to break ground with their Llama 3 LLM set to be released in July 2024. With a renewed view and focus for the future, Meta presents a compelling investment opportunity for long term investors in 2024.
Robust FCF and Margin Profile
META stock boasts a solid financial profile, evidently in its healthy margin profile and strong FCF generation. The company’s core advertising business remains highly profitable, and generative AI will be a primary driver of growth.
Their gross margins consistently exceed 70%, showcasing their ability to remain consistently profitable. Furthermore, their cash flow generation has been a key strength, allowing them to reinvest into new growth initiatives. This includes their new LLM and their notable investments in the Metaverse.
In fact, there is no better way to showcase their robust cash flow generation than placing a magnifying glass on their metaverse investments. Meta Reality Labs has lost 46.5 billion on their Metaverse bet since 2019. Yet the company remains in the best financial shape in their history, and even issued their first dividend. As Meta continues to focus more on their AI bets in 2024, the long term revenue growth and cash flow generation capabilities remain endless.
Meta Plans to Launch New LLM in July
Meta continues to make significant strides in artificial intelligence. The company is investing heavily in developing its own large language model (LLM), Llama 3, planned for launch in July. This LLM, similar to groundbreaking models like ChatGPT and Gemini, has the potential to enhance Meta’s existing products and services in various ways.
For instance, the Llama 3 could personalize user experiences on Facebook and Instagram, improve content moderation, and even power new AI-driven features within the Metaverse. Content moderation has been a huge flaw across Meta Platforms products. AI could hopefully solve the constant resurgence and push of harmful content to its users, more specifically children.
Additionally, the LLM is designed for superior responsiveness and multimodality. While this will be a feature for most of its competitors, Meta aims to power AI-driven avatars and personalized virtual experiences in the metaverse. They have barely scratched the surface of their long term vision with AI, and the future remains extremely bright.
META Stock: Don’t Sell, and Buy More If You Can
META stock presents a compelling investment opportunity for 2024, and their valuation remains attractive relative to its peers. Their cash flow generation, margin profile, and key investments in AI and the metaverse go well beyond what’s reflected in the current stock price.
The release of their Llama 3 LLM in July will be a major catalyst for the company this year. These growth initiatives along with their strong financial profile have the potential to unlock significant value for shareholders in the long run.
On the date of publication, Terel Miles did not have (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.
