Looking to see if Meta AI can reach consumer scale, says Goldman Sachs' Sheridan

Core Insights - Meta's stock is experiencing a decline due to concerns over capital expenditure (capex) visibility and return on investment [1][3] - Alphabet's cloud backlog provides investors with confidence in correlating capex to revenue over the next one to two years [2] - Meta's AI investments are expected to take time to yield results, with a potential wait until the first half of the year for foundational model outputs [3] Meta Analysis - Meta's core business is expected to maintain a revenue growth rate of over 20%, driven by ad creation and monetization efforts [5] - The transformation of Meta AI into consumer and business-facing applications is seen as a critical medium-term goal [5] - Historical patterns indicate that Meta shares often react negatively to investment cycle discussions but tend to revert to market multiples over time [7] Alphabet Analysis - YouTube's advertising revenue has increased by 15% year-over-year, indicating strong performance amidst changing media ad spend [8] - The subscription revenue from YouTube is reportedly growing faster than its advertising revenue, suggesting a robust business model [10] - The combined revenue from YouTube ads and subscriptions is believed to be larger than Netflix and growing at a faster rate, highlighting Alphabet's competitive position [10]