At the time when the market's focus is on US macroeconomic data, Meta, one of the magnificent 7 technology giants, quietly hit a new all-time high in overnight trading.

Looking at the increase from the beginning of the year to the present, $Meta Platforms (META.US)$ has accumulated an increase of over 50%, although it is not as high as the 150% increase of chip giant Nvidia, it far outperforms the other 5 major technology stocks. Google and Apple have risen by over 17% this year, Amazon by nearly 16%, Microsoft by over 11%, and Tesla even recorded a decline of over 15%.

Why is Meta favored by the market?

The market performance of this earnings season shows that investors are increasingly impatient with the practice of technology companies profiting from heavy investments in AI. The shadow of cost is looming over the technology giants, and the market's concerns about the return on massive AI investments are growing.

Furthermore, Meta unexpectedly raised the lower limit of its annual capital expenditure range due to AI investments. However, its second quarter total revenue and core business advertising revenue both exceeded expectations, growing by over 20%. The mid-point of third quarter revenue guidance is also higher than expected, which makes the market more willing to believe in Meta's "AI monetization" narrative.

Moreover, Meta only raised the lower limit of its annual capital expenditure range by 2 billion dollars, while the upper limit of the range remained unchanged, which to some extent alleviated investors' panic about uncontrolled growth in capital expenditure.

Meta CEO Mark Zuckerberg previously stated on a conference call that AI investments will significantly benefit the company's advertising business. AI-optimized ad delivery improves ad effectiveness and enhances user engagement and experience through improved content recommendation engines. Although Meta's short-term investment in AI infrastructure may not generate immediate returns, Zuckerberg believes that early strategic positioning is crucial.

In addition, Meta has been receiving bullish news recently.

According to multiple sources, it is highly likely that Meta will showcase its first AR glasses (code-named Orion, Orion) at the Connect conference on September 25th.

Currently, Meta has outperformed its competitors by successfully commercializing its to C products.

According to a Reuters report in July, in the fourth quarter of 2023 alone, the shipment volume of Ray-Ban Meta exceeded the total life cycle shipment volume of the first-generation product Ray-Ban Stories, reaching 1 million pairs. This trend is expected to continue in 2024, with the estimated annual shipment volume surpassing 1.5 million pairs. Currently, the product is consistently out of stock.

In addition, Meta has launched a new web crawler program, Meta-External Agent and Meta-External Fetcher, for collecting internet data to train its AI models. This program bypasses the robots.txt rules and allows unlimited data acquisition.

How does Wall Street look at this?

Tigress Financial has raised its target price for Meta Platforms from $575 to $645 and maintains a strong buy rating. The analyst stated that Meta's increasing cash flow enables continued investment in AI projects, thereby improving user engagement and providing better content and more effective advertising experiences.

Bank of America believes that Meta is attractive because of its strong growth and AI opportunities, raising its target price from $550 to $563, with a "buy" rating, and praising Meta as one of the top AI companies.

In addition, with the recovery of market sentiment, investors' hedging demand for meta platforms quickly cooled from historically panic levels. The number of put options buyers decreased significantly, while the buyers of call options began to return. This change in preference led to a sharp decrease in the Put-Call skew indicator, which measures the difference in demand between put options and call options.

Editor/Somer