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Somewhat Bullish +35

Gary Black Says Meta Stock Could Mirror Alphabet's Post-Earnings Recovery: Here's Why the Analyst Calls Google 'The Better Business'

📈 Analyst Gary Black predicts Meta (META) could mirror Alphabet's (GOOGL) recent post-earnings recovery trajectory.

📉 Meta shares fell 7.45% in extended trading and tumbled further on Thursday due to heavy AI spending concerns.

💰 Alphabet trades at a higher multiple of 17x 2026 EV/EBITDA compared to Meta's 11x, according to Gary Black.

🚀 Black cites Google's search dominance, cloud growth, and Gemini chatbot as key advantages over Meta.

📊 Year-to-date, Meta shares are down 17.12% while Alphabet's Class A and C shares are up approximately 6%.

🗣️ Wall Street analysts express skepticism regarding Meta despite solid advertising fundamentals and growing AI infrastructure.

⚖️ Gary Black concludes that while META is cheaper, GOOG likely possesses the better long-term business model.

Bullish Signals
  • Analyst Gary Black explicitly states that Alphabet (GOOGL) has the 'better business' compared to Meta due to its search and cloud segments.
  • Alphabet's stock has recovered about 5% after an initial drop, suggesting a potential rebound pattern for Meta.
  • Meta possesses high growth characteristics with a Growth score in the 89th percentile according to Benzinga edge rankings.
  • Analysts like Justin Post believe investors may be underestimating Meta's ability to monetize its growing AI infrastructure.
Risk Factors
  • Meta shares fell 7.45% on Wednesday and tumbled further on Thursday following earnings that missed Wall Street expectations.
  • Investors are expressing widespread concern over Meta's escalating AI investments, prompting analysts to cut price targets.
  • Management provided slightly negative near-term guidance which the article notes missed analyst expectations.
  • Meta shares have lost 17.12% year-to-date compared to Alphabet's Class A and C shares which are up about 6%.
Full Analysis
Analyst Gary Black of The Future Fund argues that Meta Platforms (META) stock could experience a recovery similar to Alphabet Inc.'s (GOOGL/GOOG) recent post-earnings rebound. Black suggests investors are currently overreacting to conservative guidance and one-time items, noting that Alphabet's stock fell roughly 10% initially before recovering about 5% as the market reassessed its fundamentals. Black identifies Google's parent company as the superior business due to its dominant search segment, rapidly expanding cloud division, and Gemini chatbot capabilities, which Meta lacks. He highlights that Alphabet trades at approximately 17 times 2026 EV/EBITDA with an estimated long-term revenue growth of 20%, compared to Meta's valuation of roughly 11 times EV/EBITDA and 18% projected growth. Despite the bullish comparison, Meta faces significant headwinds following its earnings report. Shares dropped 7.45% in extended trading on Wednesday and tumbled further on Thursday as investors reacted negatively to heavy AI spending and guidance that missed Wall Street expectations. Consequently, year-to-date performance shows Meta shares down 17.12%, while Alphabet's Class A and C shares have gained about 6%.