I Can't Stop Buying Meta Stock... Here's Why

Ajouté : 2026-06-04

[00:00:00]Hello everybody, welcome back to another valuation investing video. And today in this video, I'm going to be going over why I am continuing to load up on Meta stock. So, since my last video on Meta where I said I have about $8,500 in Meta stock right now, I've added two more shares to this company. So, let's take a look at that portfolio allocation in Meta and I'm going to be talking about mainly in this video why I'm so confident in the future for Meta stock to give us great returns for the future I think it's the best big tech stock to buy now. Plus, I think that Meta's actually going to be the biggest beneficiary from AI, maybe besides Amazon in the future. I think Meta is still going to be one of the best companies to buy with AI, especially with the valuation it's at today. So, let's get into this video and show you guys my portfolio as of right now. Okay guys, so if we take a look at my portfolio right now, we're almost at $31,000 in the portfolio, almost $7,000 in gains. If we scroll down to my position though in Meta right now, my position is 16 shares in this company, average price of $566.

[00:01:11]Today it's trading at about $623 per share. My market value of the company is basically $10,000 right now. If we take a look at the allocation of Meta in my portfolio guys, 32% so almost a third of my portfolio is in Meta. I know a lot of people in the comments or or watching this channel are going to say that's way too much into one company. I beg to differ. I actually think that it's better to put a lot of money into a company you're very confident in going forward. If you take a look at what Warren Buffett has said, diversification is protection against ignorance and he has already shown that you should actually be putting a lot of money into companies that you're confident in. Look at Apple when he bought Apple. His portfolio was nearly 50% of Apple. Guys, I think it's perfectly fine to have a position in your portfolio, even up to half of your portfolio. Once you get over 50%, then it's a little bit too concentrated, personally. But, this is my portfolio right now. Meta 32 plus percent, Google 16, FICO 11, ASML 11, VOO, this is my Roth IRA, 8.5%.

[00:02:20]Then, we have Microsoft 8%, Adobe 7 and 1/2, Celsius 4%. So, this is what the portfolio is looking right now like right now. But, let me tell you why I actually bought two more shares of Meta.

[00:02:33]And, by the way, my average buy price of those shares was like $620. So, let's take a look at some recent news coming out about Meta, why I think this is big for the business. So, the first thing I want to talk about is actually why the stock is up a decent amount today is going to be Jensen Huang, which is the Nvidia CEO, praises Meta saying nobody uses AI better. scroll and take a look at what the CEO said, he has praised Meta for how they've incorporated their AI in its social media services. I also want to tell you guys people are worried about their CapEx spend into AI infrastructure. That's the main reason why I think the stock is compressed.

[00:03:12]Because, as we can see here on forecaster.biz, look at the stock price.

[00:03:16]We're down 10% in 1 year when the S&P 500's up 15 plus percent. Meta's underperforming the market. And, like I was saying, I think it's because the CapEx. If we go over to the financial statements, take a look at the capital expenditures, guys. They've been spending a lot of money on AI. As we can see, they are expected to spend 125 to 145 billion dollars in CapEx for this upcoming year of 2026. So, people are worried that they're really pouring in a lot of money into AI, and that's definitely a concern going forward cuz, obviously, if AI doesn't pan out to help this business in an exponential way, this will really harm the stock price, and it's going to be burnt money, basically. So, people are worried about that, but I think that this is actually going to be a benefit to the business, like Jensen Huang is saying. So, if we take a look at that, what the article says. As we can see, Jensen Huang said, AI went from a classical recommender system running on CPUs to now generative AI agentic system that's making recommendations. Everything from the way the social media works and the way they recommend ads and help advertisers create content has fundamentally been changed, and their earnings has show it.

[00:04:31]And that's the reason why they're investing so hard. They just see such a huge, much larger future potential for it, and that is the main reason why this stock is doing good today. Like I said, the Nvidia CEO is saying, "Meta is looking like the biggest beneficiary, at least so far, with AI, and that's why they're confident in spending so much into the AI." I also want to show you guys something else here. If we take a look at the already statistical, basically, analysis of how AI is helping Meta, look at here. AI drives Meta's revenue by supercharging ad targeting, boosting engagement, and automating campaign creation. And the specific statistics that back this up is measurable ad conversions. Upgraded AI ad ranking models caused Facebook feed clicks to rise by roughly 3% and generated 5% increase in conversions on Instagram. So, that's looking good for Meta. You also have soaring ad revenue and impressions. Improved recommendation algorithms and generative AI tools contributed to 33% year-over-year revenue growth. This is one of their best growth rates in basically 5-plus years because of this. We also take a look, impressions rose 19%, and the average price per ad increased by 12%.

[00:05:46]So, that's how Meta makes their money.

[00:05:48]Advertisers just pay them to be on their platforms like Facebook, Instagram, all these other platforms that they own. And when the impressions rise, that's number one going to help obviously people see more ads and advertisers are going to pay more to for that. The actual price per ad increase also, which in turn also helped the revenue because if obviously the price per ad increased, that's going to help their revenue. AI driven economic impact as well. Capital invest investments in AI subscriptions.

[00:06:19]Meta's proven return on invested capital from AI is over 52% guys. That is a huge number. That is insanely high and let me show you some more statistics. We take a look at some recent news coming out from Meta as well. They launched paid subscription plans across Facebook, Instagram, WhatsApp, and Meta AI. Meta is officially unveiled a new suite of subscription offerings across its family of apps. So they're really playing into the subscription-based model, which hopefully can help them get more revenue alongside the advertising. As we can see, the new subscriptions include Facebook Plus, Instagram Plus, and WhatsApp Plus, which are being rolled out globally and it also includes AI subscription plans as well. So I think that this company has a lot of other avenues to generate more revenue, especially with AI-powered services as we can see here. Also, if we take a look at this right here, look at Meta is trying to sell AI agents to businesses in latest effort to diversify away from ads. So another thing going for Meta here, they're trying to sell subscrip- the subscription to businesses for these AI agents. That could be huge for Meta going forward. However, if we take a look at one thing I don't like about Meta, one thing I don't really like is the allocation to say more wearables. As we can see, they're trying to develop an AI-powered pendant designed to function as an always-on personal assistant. I don't think this is really a good idea.

[00:07:49]I think the Meta glasses are decent, but putting a lot of money and expenses into the Reality Labs segment of this business continues to really be, I think, kind of a worrisome category for this business. I think they just need to focus on their basically AI and ads segment of this business and not focus on the wearables. I think especially trying to create a pendant, I don't think that's a good idea. I highly doubt anybody's actually going to use that.

[00:08:17]But if we take a look at the positives here, guys, like I said, another clear sign of AI helping Meta here is look at the revenue growth in their recent quarter. Grew 33-plus percent. If we take a look at basically 2021, that was the last time that they grew this fast.

[00:08:33]They are reaccelerating growth basically over the past year.

[00:08:38]As we can see, each quarter is accelerating very good. Annual revenue growth rate is over 20% recently. If we take a look at the net income as well, guys, the net income looks just as good.

[00:08:49]But if we take a look here, the net income actually should be better on the annual. This is another thing that people aren't even really looking into.

[00:08:57]If we take a look at these annual numbers, guys, and the quarterly numbers, we can see in the third quarter 2025, they had a tax basically hit from the Big Beautiful Bill, which was a one-time payment that wasn't actually a one-time payment. It's just accounting principles that made that a one-time payment. So, in reality, this annual number here in 2025 should have been over 70 billion. And for the trailing 12 months, it should be near 80 billion dollars. So, keep that in mind with Meta. And with that being said, look at the PE ratio right now, 22 PE ratio.

[00:09:31]That is using the net income including the tax hit. So, if you don't include the tax hit, guys, this PE ratio is under 20. And if we go over here and just take a look at the S&P 500 using forecaster, we can also take a look at the PE ratio. Right now, the PE ratio is 28. If we take a look at Meta, go back to Meta, guys, if we take a look at the past, say, few years for the PE ratio, we're trading at a 22. In reality, like I said, it's under 20. So, we're trading at a very cheap valuation. The only time we saw as cheap of a valuation for Meta was during this crash in 2022. But, if we take a look at that crash in 2022, look at the numbers here for the growth.

[00:10:15]Once again, the growth numbers actually declined in 2022. But yet, we're expecting 30-plus percent revenue growth for Meta going ahead in the future. I think these are all great signs for this company going forward. I also want to show you guys the AI earnings call with forecaster's AI agent to take a look at that recent earnings. They had very good robust user base. Over 3.5 billion people were using any of their platforms on a daily basis. So, almost half of the Earth is using Meta products. That did actually decrease quarter over quarter though, however, but they did cite the only reason for that was because outages in Iran and a Russia restriction. If that wasn't the case, they still would have increased that daily active user base. So, it's nothing too worrying to me. Also, the strong revenue growth, like I said, 33% ad performance, ad impressions increased 19%, average price per ad per ad 12%. If we go down here also, product innovation, starting with new spark, that's their AI, their generative AI that they're trying to create and actually implement into their basically subscriptions and all that other good stuff. The negative news though, user disruption, like I said, Reality Labs performance, that also isn't doing well at all. That's the one thing I also don't like, like I said.

[00:11:34]Investment losses as well. Risk and concerns, nothing too crazy here besides that CapEx spend. But the future outlook, look at this. Total revenue for the second quarter of 2026 projected to be around $60 billion. That's another 30% increase in revenue year-over-year.

[00:11:51]So, they're expecting, once again, great growth. 30-plus percent for company of this size is insane. And I think that that is why I'm really excited about this business. It is the cheapest big tech stock right now, the cheapest Mag 7 with the PE ratio. There's no company trading at under a 20 PE ratio. I think the other closest one is actually like, I think it's Microsoft right now. But with Meta, guys, we're trading under a 20 PE ratio, but growing the second fastest out of the Mag 7, it's kind of a no-brainer to me. I think once the sentiment around this business starts to be uplifted, and once people actually realize that this CapEx spend is going to actually help the company a lot in the future, then this company will see a huge rise in the stock price. I think this company should be worth nearly a thousand dollars per share. Okay, guys, so if we take a look at my assumptions for my intrinsic value calculations for Meta, this is what I'm assuming. Bearish case, 10% revenue growth for the next five years compound annual growth rate.

[00:12:54]Base case, 14%. Bullish case, 18%.

[00:12:57]Analysts expect them to actually grow 17-plus percent. And I think these are very conservative numbers. I want to keep it conservative because if we still get good returns on a conservative basis, then that's how you know that it should be a good time to be buying this company. Future profit margin, 30, 35, 40. Meta is a very profitable business and very efficient in terms of their profit margins. I think that they deserve a 35% profit margin. Future PE ratio, I'm doing 20, 26, 32. I still think that these are pretty low PE ratio numbers. They could be a lot higher for the future, but I do think that this company does have some cyclicality issues in terms of it's not really predictable their revenue growth as say other big tech companies like Microsoft and other companies because they don't have that subscription-based revenue model. So, this company 99% relying on advertising revenue. If there's a downturn in the economy, then that could be a big issue. Shares outstanding 0 -1% and -2% each year. If I press calculate, guys, I think these are conservative numbers, mind you. Base case, I think bull case could definitely happen. If we scroll down, I get 5.7% bearish case.

[00:14:09]That is still pretty good for a bearish case scenario. Base case 20%, bullish case 34%. So, with that being said, my projected price in 2030, 2031, I'm I'm going to say $1,700. That's my estimate for this company going ahead in the future. And if that is the case, guys, that means Meta would be trading at say four, five trillion-dollar company. Also, there is a little thing to add here that probably isn't going to help much, but they do have an actual term where if this company gets to nine trillion dollars in market cap by 2031 or something, 2032, the basically management gets call options for this company. So, if they are able to achieve that, they will get bonuses in terms of stock-based compensation. So, that could be extra motivation to help this company become a very large and very valuable business. So, that's my assumptions for Meta going forward. Thank guys for watching this video. Please subscribe, hit the like button, comment down below, and please go ahead check out forecaster.base, guys. Like I said, we use this to take a look at Meta with the stock overlay of the PE ratio, all the past fundamentals for past 20 years you can go back to. Also use their Forecaster AI agent to take a look at their recent earnings call highlights.

[00:15:31]So, if we take a look here, use code valuation10 to get 10% off. The monthly subscription is only $33 per month. If you are an avid investor and you need good research, use forecaster.biz and I think it's a very good investment for $33 per month. You can make a lot more money if you get the right data and that is what Forecaster has. You get access to 150,000 instruments, up-to-date fair value ratios, seasonality and COT reports, stock screeners, insider transactions, key events on every company, and like I said, Forecaster's AI agent, and you can cancel it at any time. So, please go ahead, check it out.

[00:16:08]Link's in the description and the pinned comment. Thanks, guys, and see you.