META Q1 EPS Preview: Expectations & AI Initiatives

Meta Platforms Company OverviewMeta Platforms (META), the world’s largest social media platform operator, will report earnings on Wednesday, April 30th, after the stock market close. Evolving from its original Facebook website, Meta Platforms has expanded from a once-obscure and one-dimensional company to a wide-ranging social media operator through key strategic acquisitions such as the Instagram photo and video sharing app and the wildly popular and internationally used WhatsApp messaging platform.Roughly 97% of Meta’s revenues are derived from advertising. Though the company faces tough competition from Alphabet (GOOGL), Amazon (AMZN), and Snap (SNAP), Meta has grown over the years through synergies within its business and through third parties, innovation, and its massive user base. In addition, Meta is working on breaking into the virtual reality (VR) market with its Oculus division.Meta Earnings PreviewYear-to-date, META shares have succumbed to the intense selling in richly valued big tech stocks within the “Magnificent 7” and are down ~8%. However, META shares have pared losses recently, and in context, the losses are relatively small. For example, over the past year, shares are up ~27%, and over the past five years, they have soared ~171%.Image Source: Zacks Investment ResearchMETA Implied Move (Based on Options Market)The options market implies a rather large move of plus or minus 9.2%.META Earnings ExpectationsZacks Consensus Analyst Estimates suggest that earnings will grow roughly 10.83% for the current quarter and will be flat for 2025.Image Source: Zacks Investment ResearchMETA Has a Bullish EPS Surprise HistoryWhile META earnings have slowed recently, the company has a long history of beating Wall Street expectations. META has delivered positive surprises in nine consecutive quarters, and over the past four quarters, the social media giant has beaten expectations by an average of 13.77%.Image Source: Zacks Investment ResearchMETA’s Valuation is CheapThe correction in META shares has made the stock cheaper from a valuation perspective. Shares are trading at ~23x earnings and are hovering near the cheapest levels in two years.Image Source: Zacks Investment ResearchMeta is Leveraging AIWhen most investors think of artificial intelligence, they mainly focus on large language models and chatbots such as ChatGPT. That said, many investors underestimate companies like Meta, which leverage AI in unique ways. For instance, META has integrated AI into WhatsApp and Messenger, added visual creating tools for posts on Facebook and Instagram, and is using it to optimize ads. Meta is expected to introduce AI for customer support, video, and multi-modal experiences in time.AI Boosts Instagram ReelsInstagram has turned into a cash cow for Meta. Roughly 40% of the content Instagram users see is curated through AI. Through AI optimization, Instagram Reels (short videos) success has led to an increase in time spent on the app by 24%.Bottom LineThough Meta was caught in the recent tech sell-off, the company has established itself as a leader in the social media realm. Its strong earnings track record and forward-looking approach to AI integration signals a bullish outlook for the company.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Snap Inc. (SNAP): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks