On CNBC’s ‘The Exchange’, Mark Mahaney, head of internet research at Evercore ISI, discussed expectations for Meta Platforms Inc.’s (META) upcoming earnings report. Mahaney highlighted that Meta has been a significant beneficiary of AI developments, with its market cap increasing by nearly $200 billion since Monday, attributing this surge to the company’s ability to implement AI optimizations into its advertising model, leading to immediate monetization and profitability.
Mahaney emphasized that companies like Meta, which do not sell AI infrastructure but rather use it, are positioned to gain from innovations like those from OpenAI and more recent efficiency hacks like those from DeepSeek. These advancements allow for cheaper and more effective deployment of AI, potentially benefiting Meta significantly in the long term, although he noted it might not immediately reflect in the company’s profit and loss statements until 2026 or 2027.
Regarding user growth, Mahaney expects only low single-digit percentage increases given Meta’s already vast user base but anticipates robust advertising revenue growth. He predicts Meta could report around 17-18% year-over-year revenue growth, despite currency headwinds, based on positive channel checks for digital advertising in Q4.
He also addressed Meta’s unique approach to providing detailed capital expenditure (CapEx) and operating expense forecasts, a practice he praised for giving investors clarity, which could, however, temper street estimates post-earnings due to the high spending forecasts. Mahaney pointed out that Meta’s recent announcement of a $60-$65 billion CapEx plan for the year ahead might have already de-risked the earnings announcement, showing strategic foresight even with knowledge of cost-reducing innovations like DeepSeek’s.
In response to whether Meta could become the “new Google,” Mahaney acknowledged the strength of both companies in leveraging first-party data for advertising, giving them a significant advantage in ad targeting. However, he noted Google’s unique position with search revenue, which he considers unparalleled, though he remains skeptical about Meta’s ability to replicate Google’s success in search with its AI features. He sees Meta’s AI venture more as an option play – low risk with potentially high rewards, suggesting that if Meta can successfully tap into search-like monetization, it could indeed challenge Google’s dominance in digital advertising.
Overall, Mahaney’s insights suggest a bullish outlook for Meta, with AI playing a pivotal role in its growth trajectory, though tempered by practical considerations around immediate financial impacts and long-term strategic positioning in the tech advertising landscape.
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