The price of Meta ( META ) ticked up before paring gains after the company agreed it would pay $16.68 billion to settle a social media addiction case with a group of state attorneys general. Yahoo Finance Executive Editor Brian Sozzi talks with Yahoo Finance Markets and Data Editor Jared Blikre, Sevens Report Research Founder Tom Essaye, and Edward Jones Senior Global Investment Strategist Angelo Kourkafas about the company's future and how it will approach monetizing AI.
we had news cross just before I was coming to air on a potential settlement on that social media case. That stock is trading well below a market multiple.
Yeah, well, let's take a look on the WiFi interactive and I'll show you uh the stock has really done nothing over the last couple of years. Here's a two-year view. And here's where we are right now, 571. We've been at as high as just over 800. and the uh line here that I'm looking at is the 530 to 540, 540 area because if you take a look at it, oops, let me bring that back up. If you take a look at a seven-year chart, and this goes back to pre-pandemic, you can see we've got a li a nice little potential topping formation here. So if we start cracking and moving below 540, guess what? I think we're headed for this at least 400 here, and that's just a technical analysis. But yeah, as you mentioned, the stock is up on the news, uh but not as much as it was earlier. I'm looking at gains of maybe half a percent today. And uh that was up 4-5% in the pre-market. So already uh that bump is getting sold.
Tom, big price tag for Meta to uh settle this, $16.7 billion dollars. But now with this out of the way, this headwind to this company's valuation, is Meta one of is that the top Mag 7 stock to buy here? If it's not going to be Nvidia, why not Meta with this overhang now gone?
Yeah, I don't think so. I don't think that this overhang was is really the the problem with Meta. I think the bigger problem is how are they going to monetize AI? To Angelo's point earlier, we are shifting to a monetization phase. If you look at some of the other Mag 7 names, if you look at Google is sort of one of the closest competitors. Well, it's obvious how they're going to monetize it, right? They have Gemini, they have their chip business, they have their cloud storage business. How is Meta going to monetize this? Is it through better search revenue uh or better ad revenue through Insta? Is it through Facebook? Is it through leasing
Tom, I hope it's not with any more ads. I get enough ads on Instagram and Facebook. I don't need any more of this crap.
Exactly. They're going they're going to be so much more targeted, Brian, you won't believe it once it gets a hold of it. That's the question is how are they going to monetize it? I think that's the biggest problem for Meta.
Well, that's absolutely terrifying. Uh Angelo, love to get your thoughts on on uh Meta, but also the Mag 7 more broadly.
Yeah, I think there's a a headwind that is being removed and that's why the stock is responding higher. I think more broadly, we like, we have an overweight on the communication services sector. Uh that's another way to kind of diversify uh the AI exposure and the technology exposure. I think there could be a time now where some of the positive sentiment moves from the semiconductors to the Mag 7 hyperscalers. So we do like that diversification and more broadly, I think this is a very rotational market, both within tech and beyond tech as well.
Angelo, your your view on communication, uh is that also tied to anything space? I mean, of course, you had SpaceX out there, a lot of these companies are now putting more satellites in space. That could be a pretty big boost to communications.
Yeah, that's part of the basket and also, let's not forget, Alphabet is is part of it. So you still have that AI exposure, but to Tom's point, you have that more clear monetization path on AI. So, uh if we look at valuations for the sector and some of the individual companies that make it that are the heavyweights, we have a favorable outlook there.