Analyst: Meta Platforms (META) Has 'Best Performing' Ad Business Regardless of 'What Happens This Year'

We recently published a list of Top 10 Buzzing Stocks in May. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against other top buzzing stocks in May.

The latest quarterly results from a couple of major technology companies have soothed concerns about AI demand that prevailed in the market following the launch of DeepSeek. Storm Uru, Manager at Liontrust Global Dividend Fund, said while talking to CNBC that the Satya Nadella-led tech giant’s results were “extraordinary.”

“50% of that growth came from AI revenue, and that’s an important marker for us going forward. Because after Deepseek about four months ago now, the debate really was around as digital intelligence gets smarter and as it gets cheaper, what is going to be the impact on demand. And what we found out last night was that demand is accelerating,” he said.

David Grain, Founder & CEO of Grain Management, also believes AI demand could be strong amid a variety of factors.

“The advent of AI has created this explosion of demand for data centers and compute power, but the drivers of where it makes sense to actually build these data centers has a lot to do with the availability of reliable and high quantity of electricity. So I think there’s definitely no slowdown in the demand side of the equation,” he said during an interview with CNBC.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

For this article, we picked 10 stocks making moves these days. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Investors: 235

Mark Mahaney, Evercore ISI head of internet research, said in a latest interview with CNBC that Meta Platforms (NASDAQ: META) is a high-quality stock amid low valuation.

“I think that at less than 20 times earnings, I think it’s nicely dislocated and it’s a high-quality name. I think it’s going to be one of the best performing, relatively, ad assets out there, almost irregardless of what happens later this year. There’s a lot of resiliency to the Meta Platforms Inc (NASDAQ:META) model that may be underappreciated,” Mahaney said. “I think investors are concerned about with Meta Platforms Inc (NASDAQ:META), I think is somewhat overstated. Yes, it’s about 10% of their revenue comes from China-based companies, but those companies are still selling. They may not be selling into the US, but they’re still selling into Europe, Latin America, etc. They’re using Meta to get there. There’s also this little bit of an interesting hedge. The worse things there are between the US and China, the less chance of a TikTok actually staying in the US, and that’s going to be a source of funds I think for Meta. So I think there’s a little bit more resilience to Meta Platforms Inc (NASDAQ:META) than the market makes.”

Meta Platforms’ (NASDAQ:META) biggest strength remains its huge user base, which continues to grow despite record levels. The company has 3.43 billion monthly active users as of March, up 6% year over year. This equals about half of the world’s total population, giving the company immense power for monetization and data processing. The company also raised its capex guide for the year from $60-$65 billion to $64-$72 billion, crushing concerns about an AI and data center slowdown.

Another overlooked element in Meta Platforms, Inc. (NASDAQ:META) business is its ads growth. The company, which depends on advertising for 98% of its revenue, is growing at a rate of 21% YoY. In comparison, Google Search grew by 9%, while Alphabet’s overall business, including Cloud and Services, expanded by 12%. Even YouTube’s year-on-year growth stands at 11%, well below Meta Platforms Inc (NASDAQ:META) rate.

Given Meta Platforms, Inc. (NASDAQ:META) current growth, Wall Street’s estimates of 21% EBIT growth and 18% OCF growth seem conservative compared to the tailwinds the company is benefiting from right now.

Nightview Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:

“Core Opportunity: Meta Platforms, Inc.’s (NASDAQ:META) platforms—Instagram, Facebook, WhatsApp, and Messenger—reach nearly half the world’s population daily, making it one of the most powerful advertising ecosystems globally. With investments in AI and augmented reality (AR), we believe Meta is also creating significant optionality for long-term growth.

Competitive Advantage: Thriving Core Platforms: In Q3, we saw Meta achieve a 23% YoY revenue growth,—a testament to strong user engagement across its ecosystem. The advertising landscape as a whole continues to evolve and we believe Meta’s existing platforms offer a defined advantage in this new world. Existing platforms in the age of AI continue to be the most powerful indicator of future success in our opinion.

AI Leadership: Meta’s AI capabilities and the Llama AI model are driving efficiency and product innovation. In our view, these assets have been under-appreciated by the market while enhancing Meta’s ability to further scale and innovate its leading advertising business…” (Click here to read the full text)

Overall, META ranks 1st on our list of top buzzing stocks in May. While we acknowledge the potential of META, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.