Why Meta Just Became the Most ATTRACTIVE AI Stock (Behind Tesla)
Overall Thesis
Meta is the most attractive AI stock surprise behind Tesla after a 20% one-month drop to a 25x PE despite having the world's largest user base, massive capex, and now Alexander Wang running the Superintelligence team with Yann LeCun finally gone. Jo expects strong surprises within 12 months and sees PE expanding from 25 to 33 on top of growing earnings.
Narratives
Meta has dropped 20% in one month to a 25x PE, which Jo views as a contrarian opportunity given 3 billion users, massive compute capex, Alexander Wang now running the Superintelligence team, and Yann LeCun gone. Jo expects strong AI results within 12 months and PE to re-rate from 25 to at least 33 while earnings also grow, with Meta potentially catching up to the rest of the Mag-7.
Key Arguments
- PE at 25 vs Nvidia 33 and Apple 33 is relatively undervalued
- Dropped 20% in one month on capex concerns, creating opportunity
- 3 billion users across Facebook, Instagram, WhatsApp
- Alexander Wang hired as Chief AI Officer after Scale AI acquisition
- Yann LeCun gone, unblocking frontier model work
- Open-source Llama strategy builds dependency ecosystem
- Zuckerberg spending aggressively on GPU compute
- Strong surprises expected within 12 months
Jo calls Tesla the no-brainer risk-reward among the Mag-7 AI plays, preferring its less-transparent alpha versus Nvidia, Microsoft, Amazon, and Google. Tesla remains his top AI bet.
Key Arguments
- Tesla has the most no-nonsense, no-brainer risk-reward in the Mag-7
- More alpha than the transparent AI plays
Apple is trading at 33 PE but is completely disconnected from the AI revolution with a weak CEO not in sync with the shift. Jo calls Apple the super loser with no chance of catching up in the AI race.
Key Arguments
- Apple completely disconnected from AI
- Weak CEO not in sync with AI shift
- 33 PE is unjustified given AI positioning
- No chance of catching up in the race