We recently compiled a list of the Jim Cramer on the Magnificent Seven Stocks Plus Netflix.In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against the other magnificent stocks in Jim Cramer's list.
On Monday, Jim Cramer, host of Mad Money, discussed the ongoing success of major technology stocks, particularly the Magnificent Seven. He noted that these companies are proving their resilience in the market, no matter the circumstances, likening their performance to having a unique "Poltergeist 2 magic."
Cramer pointed out that this latest rally for the Magnificent Seven differs from previous ones, as it is not merely a zero-sum game where gains for one group come at the expense of another. Instead, other sectors are also thriving, likely due to the influx of capital into the market.
“Unlike previous Mag 7 rallies, this one’s definitely not a zero-sum equation where the rest of the market does nothing. Other groups can roar, too, in this market, perhaps because there’s just a lot of money going around.”
He noted that the Federal Reserve's rate cuts mean that cash is losing value, creating an environment ripe for growth. He mentioned that the staying power of the Magnificent Seven is truly unbelievable.
“We know these stocks will once again be hit by endless worries, giving you more opportunities to buy and more weakness before they snap right back and start climbing all over again.”
Cramer highlighted that this week marks the beginning of a crucial four-week earnings season, emphasizing that these quarterly reports hold significant weight for investors and the broader stock market. He acknowledged the current climate of anxiety, especially following the market's impressive rally. He added:
“Why stress about how quickly the Fed will cut rates, Oh? God, I'm sick of that. What matters is they're giving vast swaths of the economy a big boost and I doubt they'll stop anytime soon.”
Cramer also observed that investors often gravitate toward underdogs in the market, suggesting that banks could be the next promising sector. In addition to banks, Cramer also mentioned the potential in pharmaceutical stocks, suggesting that investors might want to consider major players in that sector as well.
Our Methodology
For this article, we compiled a list of stocks that were discussed by Cramer during his episode of Mad Money on October 14. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of developers working in unison to create the company's messaging application.
In the latest episode, Mad Money’s host mentioned many factors that are contributing to Meta Platforms, Inc.’s (NASDAQ:META) success presently. Here’s what he said:
“Meta's off to the races again. Why not? Thanks to the success of reels, the targeted ads on Instagram, WhatsApp, the Meta-loaded Ray-Bans. Oh, it's awfully hard to bet against this one, isn't it? Very easy to make the case for Meta when you exclude the cash on the balance sheet, the stock is absurdly cheap. It's kind of strange how cheap it is.”
Cramer recently highlighted it among the stocks that have seen the most significant gains. He pointed out Mark Zuckerberg's statement that upcoming advertising efforts will prioritize Instagram and Reels.
One of the significant segments within Meta (NASDAQ:META) is Reality Labs, which focuses on developing hardware aimed at immersive experiences. A key offering in this area is the Meta Quest, a virtual reality gaming headset that plays an important role in the company's metaverse vision. In addition to virtual reality, the company is venturing into augmented reality with products like Ray-Ban smart glasses and the Orion spectacles, both of which hold promise for broader market adoption. The company has also made substantial investments in its AI initiatives, especially with the development of Llama, an AI language model.
As Llama evolves, it offers the potential to seamlessly integrate hardware and social media platforms, boosting user engagement. For instance, Ray-Ban Meta's smart glasses enable users to make phone calls, listen to music, and capture photos with a simple tap on the frame. In May, a multimodal AI function was introduced for customers in the U.S. and Canada, expanding the glasses' capabilities.
Although the initial launch of the smart glasses faced challenges in gaining consumer interest, the latest iteration, released in late 2023, has already surpassed the sales figures of its predecessor models over two years, indicating a positive reception. Furthermore, in September, a report from Reuters highlighted a significant extension of the partnership between EssilorLuxottica and Meta Platforms, solidifying a ten-year collaboration focused on advancing smart eyewear technology.
Meta’s (NASDAQ:META) expansive reach is reflected in its user base, which has nearly 3.3 billion daily active users across its various platforms, contributing to substantial advertising revenue. In the latest quarterly report, the company achieved $38.3 billion in ad revenue, alongside an overall revenue increase of 22% compared to the previous year.
Overall META ranks 3rd on Jim Cramer's list of magnificent stocks. While we acknowledge the potential of META as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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 the cheapest AI stock.
