Meta Platforms Demonstrates Cost Discipline Amid Aggressive AI Spending
"But with Meta Platforms, the company generates so much free cash flow, right? $49 billion in free cash flow it generated in 2024 and it's estimated to generate 57 billion in free cash flow here in 2025 even after all of that aggressive spending. So I like to point this out for investors to keep this in perspective that for many years the risk with these companies was that they were generating all this cash and they didn't know what to do with it. But now with artificial intelligence, they found that category they can invest and they expect to get a good return on that investment. In fact, I expect Meta's free cash flow to rise from 57 billion all the way up to 151 billion by 2035 or roughly triple between now and then over the decade."
The speaker highlights Meta Platforms' ability to generate robust free cash flow despite its aggressive $65 billion capital expenditures on AI expansion. He underscores the discipline in cost management by noting that even with cutting 600 AI jobs, the company remains well-positioned to invest in AI initiatives. The expectation is a significant rise in free cash flow by 2035, reinforcing the company’s efficient capital allocation strategy.
Meta Platforms: Buying the Dip with a DCF Perspective
"Stock number two is Meta. This is a company I do understand how they make money and how they can lose money. I was buying all the way down as it fell to $88 per share, and now the stock is at $730. Based on my DCF analysis, the numbers show a low price of $600, a high of $1,700, and a middle price of $1,000, representing a 13% return. If you’re buying Meta today, you’re betting on its ability to turn huge AI investments into even bigger profits."
The speaker outlines a trade idea for Meta, sharing personal experience of buying on dips and using DCF valuations to set a price range. The analysis underscores the company’s solid fundamentals, massive user base, and significant AI investments as reasons to buy.
Commentary on Meta and Value Investing
"Now, keep in mind, guys, I buy large companies. I’m not looking to buy these small little companies that require me to really understand management. I want to buy big companies that are mispriced. Think Meta in 2022. I was a buyer of Meta from 150 all the way down. Actually, I think less than 200 all the way down to $88 a share. I bought it on its lowest day. And the entire time people were saying, "You don\"t get it, Paul. Meta\"s done. Zuckerberg needs to be fired." Those are the same people who are probably buying the company today at $760 a share."
The speaker shares his personal experience with buying Meta during a significant price decline, emphasizing that value investing means purchasing quality companies when mispriced. He contrasts the irrational market hype with disciplined investing decisions, noting that buying at a low price can yield long-term benefits as fundamentals drive value.
Buy Meta if Price Falls Below 650
"Now, the first stock that I believe could do extremely well out of this pullback is Meta. Meta is down 6 and a half% on the month. Meta is just an amazing company with almost three and a half billion daily active people. I put in the current PE ratio for 2025 and I personally wouldn\'t pay much more than 23 times earnings. So, if Meta gets to 650 or below, I will likely start a position."
The speaker outlines a clear trade call on Meta. He highlights its strong fundamentals, huge user base, disciplined expenses and reinvestment strategy, and emphasizes that buying Meta at or below 650 is crucial to achieving his upside target. The commentary is supported by valuation metrics and growth expectations.
Buy Outright: Meta Platforms (META)
"Beginning with stock number one, which is going to be Meta Platforms, stock ticker META. And when it comes to these mega cap companies, Meta Platforms has kind of been losing some ground. And right now at today's valuation, I believe this is a gift. After all, when it comes to Meta Platforms, they are one of the largest digital advertisers in the world today, trailing only the likes of Alphabet. What are we entering right now? The fourth quarter, the biggest digital advertising quarter of the entire year. This is a stock that I'm buying outright and not utilizing an option strategy on."
The speaker calls Meta Platforms (META) a buying opportunity, emphasizing its strong advertising position and favorable valuation ahead of the fourth quarter, which is the peak advertising season.
Commentary: Meta Platforms Leveraging AI in Advertising
"Meta got some of the best AI minds money can buy and is now figuring out what to build. It's actually doing a good job when it comes to advertising and using AI to its advantage."
The speaker argues that Meta Platforms is effectively utilizing its AI talent to enhance its advertising capabilities, implying that its current strategy will help maintain its competitive edge.
Meta Vulnerable to H-1B Visa Policy Adjustments
"Meta employs 75,000 workers, with about 5,000 on H-1B visas, making up roughly 6.7% of its employee base, which could expose the company to risks if the new $100,000 annual H-1B fee is enforced."
The host provides a regulatory insight on Meta, noting that its higher percentage of H-1B workers could lead to cost pressures and operational risks if new visa fee policies are implemented. This commentary serves as a caution for investors considering Meta's valuation and potential regulatory headwinds.
Platform as a System of Record Enabling AI and Data Flywheel Effect
"When you become the system of record, you just get this data mode. And it means that your audit costs go down, your internal reconciliations become super efficient and, with modern AI, you can even have the platform generate detailed insights across exposures. That is so freaking powerful when you can trace the life-cycle of a security end-to-end."
Shomik highlights the strategic advantage of C-WAN becoming the core system of record for its clients. This integration not only simplifies back-office functions and compliance but also creates a data flywheel that enables AI-driven insights. By reducing operational friction and enhancing risk management, this system could drive further customer stickiness and potential cross-selling opportunities as clients grow their complexity.
Metas New Generation AI Glasses Signal AR Innovation
"Meta's AI Glasses. This is the thing we talked about on the show quite a lot, Jason. Just to remind everybody, they dropped an earlier version of their Ray-Ban Meta Glasses ... I think it's an enormous step forward. I share all your privacy concerns with these new meta Ray-Ban displays. By the way, $800 to start ..."
The hosts discuss Metas revamped Ray-Ban Meta Glasses which now feature an integrated display, AR functionality, and haptic controls that allow users to operate without constantly checking their phones. While they underscore privacy concerns and the 'creepy' factor of covert recording, the conversation also positions this upgrade as a significant technological leap compared to earlier products like Google Glass. The discussion hints at AR becoming mainstream and implies potential long-term benefits for Meta, supporting a bullish view on Metas innovation trajectory.
Company Commentary on Meta AR Glasses
"Meta's AI Glasses. This is the thing we talked about on the show quite a lot, Jason. Just to remind everybody, they dropped an earlier version of their Ray-Ban Meta Glasses... And then what I found with the live stream was when people were asking me questions, I'm like looking down at my phone. So it's a terrible experience. But I guess the reason it's not dumb is because this new version... It's bringing some of the stuff that I love from Google Glass to now, which is like live translation."
The hosts discuss the evolution of Meta's AR glasses, highlighting the upgrade from the earlier Ray-Ban Meta Glasses to a newer version with built-in screens, AR head-up display, and haptic control. Although privacy concerns are raised, the technological leap is seen as a significant product advancement for Meta that could strengthen its long-term positioning in the wearable tech and AR space.