Gil Luria

Microsoft turns around and sells that entire capacity to paying customers.

Meta only uses a fraction of that capacity to make ads better and sell ads for more.

The rest is just a sandbox to build new models that he's not even sure what he's going to use them for.

He got asked a couple of times on the conference call, what's this even for?

And he said, you know, this isn't a good time to ask me about that.

It's all of the above.

They're selling double digits more ads for double digits higher prices.

And to be fair to them in terms of AI investment, it's because they're so good at AI.

Our algorithms for feeding for our feed are getting so much better.

And the algorithms for predicting what ads we're going to click on are so much better.

that they can drive that kind of remarkable growth.

Again, that doesn't mean they need 125 billion of CapEx to do that.

They only need a fraction of that.

But they are getting so good at using AI to make our feeds more compelling, more organic content, more original content, more domestic content, more content that we find compelling, that it's helping them sell a lot more ads for a lot higher prices.

It's usually traded between 25 and 35 times forward PE.

Right now, as of after the market, it's around 26 times.

So on the lower end,

Meta tends to trade at the low 20s, which is where it's at right now.

But what's interesting to know is that Google is trading in the high 20s on PE, where their historical range is more in the low 20s.

And that's in spite of the two things that I pointed out.