Finding quality tech stocks at reasonable valuations is currently challenging, but Meta Platforms and PayPal stand out. Meta has diversified into VR, AR, and AI while reporting recent growth in ad impressions and revenue. However, its substantial losses in Reality Labs raise concerns, alongside its heavy reliance on advertising revenue. PayPal offers a cheaper valuation and potential for growth, making both companies attractive long-term investment options despite market challenges.
Not every swing has been a home run, at least so far. Meta Platforms' Reality Labs, which focuses on VR, AR, and the metaverse, has reported losses exceeding $60 billion over the past five years related to its development efforts.
Meta is using AI-powered content recommendations to increase user engagement on its social platforms, and AI-enabled ad tools are helping advertisers get a better return on their spending.
In Meta's first-quarter results, it reported a 5% year-over-year increase in ad impressions and a 10% increase in the average price per ad, with total revenue for the quarter increasing by 16% and adjusted earnings per share jumping by 37%.
The main cause for concern with Meta Platforms is an overreliance on advertising, as it makes up about 98% of the company's total revenue.
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