Meta Platforms (META) just grew 188% over the previous year... That scares the living daylights out of me.
'AI' Is the New 'Dot Com'
By Marc Gerstein, director of research, Chaikin Analytics
Meta Platforms (META) just grew 188% over the previous year...
That scares the living daylights out of me.
Now, I'm not talking about revenue. The company's revenue only rose 2.6% year over year in the first quarter.
Instead, I'm talking about "AI" – which, of course, stands for "artificial intelligence."
But that's not all...
This essay isn't about Meta Platforms' revenue or profits from AI. Heck, it's not even about the company saying that its investment in AI jumped 188% since last year.
That would be an outflow. But in a lot of cases, you have to spend money to make money.
However, as I'll explain today, I'm not talking about anything like that...
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Over 1 million people around the world follow 50-year Wall Street veteran Marc Chaikin for his surprisingly accurate stock predictions. And he just gave them an urgent SELL ALERT for one of the most popular stocks in U.S. history. He says, "After years of breathtaking gains, this company's day in the sun is coming to an end. You must sell this stock – NOW!" Get the ticker here.
AI is everywhere these days.
I just searched "AI 4/28/23" in the Google search engine. And I got 173 million results.
Changing the search to "AI 4/28/22" cut the results down to about 9.7 million. And switching it to "AI 4/28/19" produced only 830,000 results.
In other words, we're hearing about AI more now than ever before...
Just check out the recent conference-call discussions from tech giants Microsoft (MSFT), Alphabet (GOOGL), Nvidia (NVDA) – and of course, Meta Platforms.
I counted the number of times someone said "AI" on Meta Platforms' quarterly conference calls in the first quarter of 2022 and the first quarter of this year. Here's what I found...
In other words... Meta Platforms' mentions of "AI" grew 188% over the previous year.
People love to say "AI" these days. It reminds me of how cool it was to say "dot com" at the start of the 21st century. Heck, many non-tech companies even added it to their names.
Of course, the dot-com hype ultimately devastated many investors. The Invesco QQQ Trust (QQQ) crashed more than 80% in the two-plus years after its March 2000 high.
Now, we need to protect ourselves against an AI-driven encore.
My point is simple...
Don't let any hype steer your investment decisions. Watch closely and follow the evidence.
The Power Gauge can help us do that...
I'm not saying Meta Platforms is a bad investment today, for example. It's far from that...
The company seems to be more than just AI-driven hype. It currently earns a "bullish" rating from the Power Gauge. (Marc Chaikin discussed some of the specifics yesterday.)
More broadly, the tech sector is soaring once again. And the excitement around AI is adding fuel to the fire...
The tech-heavy Nasdaq Composite Index rose about 3.5% over the final three days of last week. And as Marc explained yesterday, the Power Gauge remains "bullish" on the space.
Look, I know the AI hype will keep growing. But let's watch it closely in the Power Gauge...
If companies like Meta Platforms start flipping to "bearish," we'll know it's time to get out. It won't matter how many more times people say "AI" in upcoming conference calls.
Follow the evidence, not the hype.
Good investing,
Marc Gerstein
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.18%
11
16
3
S&P 500
-0.10%
156
268
75
Nasdaq
-0.12%
45
44
11
Small Caps
+0.09%
400
972
509
Bonds
-2.88%
— According to the Chaikin Power Bar, Large Cap stocks are more Bullish than Small Cap stocks. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Communication
+3.92%
Information Technology
+2.59%
Real Estate
+0.86%
Staples
+0.81%
Financial
-0.20%
Industrials
-0.31%
Health Care
-0.61%
Discretionary
-0.64%
Materials
-0.91%
Utilities
-1.23%
Energy
-2.45%
* * * *
Industry Focus
Insurance Services
18
28
3
Over the past 6 months, the Insurance subsector (KIE) has underperformed the S&P 500 by -8.76%. However, its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #6 of 21 subsectors and has moved up 3 slots over the past week.
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