Meta is not an expensive stock, this fund manager says

Harris Douglas Asset Management partner and portfolio manager Paul Harris says Meta (Meta Stock Quote, Chart, News, Analysts, Financials NASDAQ:META) Platforms looks inexpensive after a pullback, despite investor concerns about heavy AI spending.

Speaking on BNN Bloomberg’s Market Call on June 23, Harris said Meta’s recent results showed stronger-than-expected growth, while the stock trades at about 17 times earnings.

“This is a company that has gross margins of 82% and operating margins of 41%,” Harris said. “It’s not an expensive stock here.”

Harris said the main concern for Meta and other hyperscalers is the scale of capital spending tied to AI. Unlike Microsoft or Alphabet, he said, Meta does not have a cloud business that can rent capacity to other customers, meaning the infrastructure it builds has to support its own platforms.

Still, Harris said AI is already helping Meta on the revenue side by improving engagement, advertising and commerce.

Harris said the market is applying too much concern to Meta’s spending and not enough credit to its earnings power and margins.

“You’re not paying a lot for the company given the dynamics that they have,” he said.

The stock was down 17.33% over the previous 12 months but up 62.19% over five years. Of the analysts covering the stock, 74 rated it “Buy,” six rated it “Hold” and none rated it “Sell,” with a consensus target of US$819.62.

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