Meta's Fundamentals Drive Record Highs, Not Trump Relationship

Meta (META) stock has surged this year, hitting record highs. However, Morgan Stanley managing director Brian Nowak attributes this to the company's strong fundamentals, not a cozy relationship between Mark Zuckerberg and President Trump.

Positive Fundamentals

* Improving platform and advertising dynamics
* Earnings and revenue exceeding estimates, with profits up 50% year-over-year
* App family (Instagram, Facebook, WhatsApp) sales increasing by $7 billion
* Operating profits rising by nearly $7 billion

Analysts are bullish on Meta:

* 54 out of 63 analysts recommend a Strong Buy or Buy rating
* 23 analysts have raised EPS estimates for 2025 in the last seven days
* 20 analysts have increased EPS projections for 2026

Data-Driven Relevance

Meta is leveraging data to enhance user engagement and advertising effectiveness:

* Analyzing scrolling patterns, user pauses, and scrolling speeds
* Using this data to improve content relevance and ad targeting

TikTok as a Potential Catalyst

The outcome of the TikTok divest-or-ban situation could impact Meta:

* Acquisition could benefit Meta
* Shutdown could provide a significant opportunity

Conclusion

While Meta's stock has benefited from a strong earnings report and Zuck's efforts with Trump, Nowak believes the company's fundamentals are the primary driving force behind its record highs.