Do you remember how 2023 was supposed to be a year of efficiency for Meta Platforms (NASDAQ:META)? This cost-cutting promise may or may not work out as planned for META stock.
Looking ahead, Meta Platforms is likely to spend a great deal of capital in multiple areas next year. This is something for investors to keep tabs on, but it’s not a sufficient reason to sell META stock.
While Meta Platforms is capable of spending a lot of money, it’s also able to compensate for those outlays by generating revenue. I’m confident that Meta Platforms will continue to use social media and artificial intelligence technology to maintain strong top- and bottom-line results.
Investors should maintain a share position in Meta Platforms for the remainder of the year, at least. Plus, I’m doubling down on my forecast that META stock will reach $500 or more.
Meta Earnings Report Spending Warning
Many commentators have effectively summed up the highlights of Meta Platforms’ second-quarter 2023 earnings results.
For example, InvestorPlace contributor Chris MacDonald observed that Meta Platforms beat Wall Street’s consensus revenue forecast by $970 million and average EPS estimate by 7 cents.
Meanwhile, Louis Navellier and the InvestorPlace research staff observed Meta Platforms’ “margins held steady” in Q2. Furthermore, Meta Platforms’ “improvements in digital advertising demand resulted in a return to double-digit revenue growth.”
This, in turn, led to a “16% year-over-year jump in profitability.”
Despite these achievements, I would recommend taking a fair and balanced view of Meta Platforms’ full-year prospects. Remember, Meta Platforms might have a “year of efficiency” in 2023, but 2024 could be a costly year for the company.
In the company’s earnings press release, Meta Platforms acknowledged that its expects “higher infrastructure-related costs next year.”
Also, the company expects “growth in payroll expenses.” Meta Platforms admits is prepared for its operating losses to “increase meaningfully year-over-year” in the company’s metaverse-focused Reality Labs segment.
AI Technology Could Catalyze META Stock
The point is, Meta Platforms knows full well that it will have to spend a lot of money in certain areas. That’s not an insurmountable problem, however. Investing capital for future growth is fine if Meta Platforms can continue to generate robust revenue.
Meta Platforms’ revenue rose 11% year-over-year in Q2 2023, but what about the upcoming quarters? What will give Meta Platforms’ top-line results a boost in this year’s second half and 2024?
I suggest that META stock investors should relax as Meta Platforms will undoubtedly generate powerful revenue with the help of AI technology. In the second-quarter press release, Meta Platforms CEO Mark Zuckerberg teased that there are “new AI products in the pipeline.”
Certainly, these AI products will include Meta Platforms’ upcoming iterations of Large Language Model Meta AI, or LLaMA. A recent version of this generative AI chatbot and assistant has been described as a “powerful open-source model that offers lots of potential to be adapted and customized for different experiences.”
In addition, Meta Platforms is reportedly “developing an AI bot that help businesses conduct customer service.” Along with that, Meta Platforms apparently has an “internal AI tool” in the works that aims to “promote staff productivity.”
Hold META Stock Until $500 or More
Clearly, Meta Platforms intends to make waves in next-generation AI technology. Long-term, this ought to bolster the company’s financials and help make up for Meta Platforms’ capital outlays in other areas.
In other words, it’s smarter to bet on Meta Platforms than to bet against it. Therefore, I’m sticking to my call for META stock to reach $500. Get ready, as this could easily happen within two years, and even in the next 12 months.
On the date of publication, David Moadel 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.
