Meta Platforms(US:META) Southwest Securities·2024-04-30 03:03Investment Rating - The report maintains a "Buy" rating for Meta (META O) with a target price of $443 29 [12][13] Core Views - Meta has raised its 2024 capital expenditure guidance to $35-40 billion (previously $30-37 billion) to accelerate AI infrastructure investments [1] - The company expects total operating expenses for 2024 to be $96-99 billion (previously $94-99 billion) due to higher infrastructure and legal costs [1] - Meta's Q1 2024 revenue was $36 46 billion, up 27 3% YoY, with operating profit of $13 82 billion, up 91 2% YoY, and net profit of $12 37 billion, up 116 7% YoY [5] - The company forecasts Q2 2024 revenue to be between $36 5-39 billion [5] Financial Performance - Meta's Q1 2024 advertising revenue was $35 64 billion, up 26 8% YoY, with ad impressions increasing by 20% and average ad price rising by 6% [12] - The company's Family of Apps segment generated $36 02 billion in revenue, up 27 2% YoY, with an operating profit of $17 66 billion, up 57 5% YoY [12] - Meta's Reality Labs segment reported revenue of $440 million, up 29 8% YoY, but fell short of the expected $494 million, with a quarterly loss of $3 85 billion [12] AI and Ecosystem Development - Meta has launched the latest open-source large model, Llama 3, and upgraded its AI assistant, MetaAI, integrating it across all apps in its ecosystem [23] - AI-driven advertising continues to grow, with 30% of Facebook posts and over 50% of Instagram content recommended by AI systems [23] - The company has opened its mixed reality operating system, Meta Horizon OS, allowing developers to run applications on more hardware and expand market reach [23] Financial Projections - Meta's revenue is expected to grow from $134 9 billion in 2024 to $191 7 billion in 2026, with a CAGR of 18 22% in 2024, 12 15% in 2025, and 7 19% in 2026 [29] - Net profit is projected to increase from $52 6 billion in 2024 to $66 4 billion in 2026, with a CAGR of 34 56% in 2024, 16 62% in 2025, and 8 24% in 2026 [14] - The company's PE ratio is expected to decline from 28 76x in 2024 to 16 93x in 2026 [14] Market Position and Valuation - Meta's market capitalization stands at $1 12 trillion, with a current stock price of $443 29 [9][12] - The company is a global leader in social networking and AI open-source models, with a projected three-year net profit CAGR of 19 3% [16] - Meta's valuation is supported by its strong position in the global social network and AI sectors, with a 2024 average PE of 34x compared to peers [16]