Meta

Meta's March earnings exceeded expectations and the company raised revenue guidance for June. To date, these results are the best example of a company seeing measurable returns from AI. Increased engagement and improved margins highlight the operational benefits of AI at scale. The best part for Meta is they're just getting started.

Investors will largely look past Meta's March results and focus on the guidance. With 10% of Meta’s ads tied to Chinese sellers, a one-third cut in spend could dampen 2025 growth estimates from 13% to 8%, inline with Google. Reality Labs cuts should keep earnings unchanged. Within a year, the China headwind will be sorted out, and the company's revenue growth should be higher for longer based on injecting AI across its product lines. As for Capex, I expect it to remain unchanged at $60-$65B for the year.

​Don't let the recent downturn in the AI trade mislead you. The reality is that AI-powered service providers are struggling to keep up with demand, and AI infrastructure providers are unable to build capacity fast enough. All the potential that drove AI stocks higher in 2024 remains intact. At Deepwater, we continue to believe there are still 2–3 years left in this bull market.​

Deepwater’s second annual Frontier Tech Survey measures the American public’s viewpoint on emerging technologies, including AI, Electrification & Automation, the Creator Economy, and Relationship with Tech. Key Takeaways: AI – General usage is increasing but we are still early in the…

Meta and Google are shifting their development focus away from Virtual Reality (VR) and Mixed Reality (MR) to ambient computing in the form of smart glasses given the potential that artificial intelligence adds to the form factor. I believe the annual market for smart glasses will reach hundreds of millions of units over the next decade, leading Apple to refocus its Spatial Computing initiatives to be more in line with Meta and Google wearables.

Meta reported a slightly better than expected June quarter and raised September's y/y revenue growth target to 20%, up from the Street's previous expectation of 15%. Most importantly, Zuckerberg presented the company’s most compelling vision of how and when AI will transform the business. The bottom line is Meta remains one of the best positioned companies to benefit from AI over the next 3-5 years.

Shares of Meta traded down 11% on the March quarter guidance that the company is entering into a multi-year investment cycle starting with AI capex in 2024 tracking to be 12% higher than previous expectations. We believe investors are missing the point. Meta has a golden opportunity in the next decade to leverage its data and build AI tools and products for billions of users, advertisers, and businesses.

Deepwater’s first annual Frontier Tech Survey measures the American public’s viewpoint on emerging technologies, including AI, Electrification & Automation, the Creator Economy, and Health-Tech. Key Takeaways: AI – General usage and awareness remains low; opinions are mixed when it comes…

It's official, the world of spatial computing has begun with the launch of Vision Pro. The reviews have been consistent: groundbreaking tech with limited use cases. On launch day, the platform has over 600 apps available, already more than the 574 apps built over the past three years for Meta Quest. Importantly, Vision Pro's developer momentum is pointed in the right direction with about 60% of those apps outside of gaming, compared to about 30% on the Quest platform. Apple's goal is to motivate developers to ensure Vision Pro goes beyond gaming to make the device mainstream.

Over the last seven years, we’ve made a habit of offering a few predictions for the year ahead. Here’s what we’re anticipating for 2024: IWO will outperform the S&P500. The iShares Russell 2000 Growth ETF (IWO) will outperform the SPDR…

WSJ reported that Meta is considering offering paid versions of Facebook and Instagram to European users in an effort to navigate EU privacy regulations. We think there is 25% chance that this comes to fruition. If it does, we estimate it would add between 2-10% to overall revenue for European availability and 3-15% if available in US and Europe.