Meta: Bull Case Remains Intact After Q1 Earnings
Summary
- I see Meta’s CapEx hike as a bullish signal. It shows the company is doubling down on AI infrastructure, despite hardware price hikes from its suppliers.
- I expect ad spending from Asian e-commerce retailers to recover if U.S.-China trade negotiations lead to a resolution.
- Threads' user growth is positive. However, it’s not likely to materially impact 2025 revenue. The same goes for WhatsApp, though it currently plays a more complementary role in Meta’s ad business.
- Regulatory challenges in Europe and increased hardware costs are concerns. Furthermore, the upcoming tariffs on semis could increase the costs of data center hardware.
- Price action looks attractive, with a recent breakout from the downward trend that began in February. I reiterate my bull case with a price target of $700 by year-end.
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