Meta Just Shipped Something Huge. The Stock Dropped Anyway
Summary
Couch Investor observes a significant disconnect in the current market, where established, profitable big tech and semiconductor companies are experiencing pullbacks, while some NeoCloud and semiconductor names are rising. Couch Investor attributes this partially to increased AI capital expenditure (capex) expectations, but primarily to a perceived overvaluation of private AI companies like Entropic, which are being given extremely high valuations (e.g., a hypothetical $6 trillion for Entropic) despite lower current profitability compared to publicly traded giants. Couch Investor believes this trend is unsustainable and that market sentiment will eventually correct, recognizing the undervalued public companies.
Couch Investor is especially bullish on Meta, arguing that it is profoundly undervalued, estimating its fair value at $800 to $1,000 per share already today. Couch Investor acknowledges current headwinds like AI capex uncertainty and a large lawsuit, but dismisses the most extreme fine predictions as unrealistic. Couch Investor highlights Meta's strategic advantage in AI monetization, particularly with the recent launch of Muse Image and Muse Video. These tools, leveraging Meta's billions of users across Instagram, Facebook, and Threads, are seen by Couch Investor as a clear path to generating tens of billions in high-margin revenue through subscription services for pro users, influencers, and marketing agencies. Couch Investor believes Meta's strong distribution and ecosystem will allow it to effectively monetize AI, similar to Google's previous success in its AI journey. Couch Investor expects market sentiment to flip once Meta demonstrates clear monetization from these AI initiatives, leading to a rapid revaluation.
Couch Investor also identifies other opportunities within the semiconductor and NeoCloud sectors. Couch Investor views Nvidia as "very cheap" valuation-wise, emphasizing its continued market leadership due to widespread adoption of its tech stack by big tech and startups alike, despite custom chip developments. Couch Investor believes AMD will see accelerated revenue growth in the latter half of this year and into 2027, dismissing recent market reactions as an overreaction. Couch Investor explicitly mentions buying an additional 10 shares of Nebula (NBU) yesterday, after it experienced a 34-35% drawdown from its June peak, seeing immense growth potential at around $200 per share. Couch Investor notes that Core Weave also has significant growth potential, but needs to demonstrate improved margins to break above $100 comfortably. Couch Investor expresses concern over private companies like Entropic, OpenAI, and Databricks being "very overvalued" and anticipates a "huge correction" in their valuations when they eventually go public.
Mentioned Stocks
Reasoning: Couch Investor groups Amazon with other big tech companies (Meta, Microsoft, Nvidia) that Couch Investor believes are "very much undervalued" in the current market. Couch Investor also mentions Amazon's Bedrock in the context of private cloud access.
Reasoning: Couch Investor argues that Meta is extremely undervalued, believing it should be worth $800, if not closer to $1,000, already today. Couch Investor notes that while Meta faces concerns over AI capex and a large lawsuit (which Couch Investor views as potentially exaggerated regarding the $1.4 trillion fine), its recent introduction of Muse image and Muse video represents a significant monetization opportunity. Couch Investor emphasizes that with billions of users on Instagram, Facebook, and Threads, Meta has the distribution to upsell AI services, generating tens of billions in high-margin revenue through subscriptions for pro users and marketing agencies. Couch Investor believes the market is currently mispricing Meta compared to less profitable private AI companies.
Reasoning: Couch Investor believes Nvidia is "very cheap" valuation-wise, despite the narrative of big tech developing custom chips. Couch Investor emphasizes that companies are still buying a lot of Nvidia's products and most startups build on its tech stack, solidifying Nvidia's position as the market leader. Couch Investor notes Nvidia experienced a recent drawdown of 15-20%, but states it was not expensive at $230.
Reasoning: Couch Investor believes AMD will "continue to grow revenue quite rapidly" and anticipates an "acceleration in growth back half of this year starting 2027." Couch Investor views the market's reaction to AMD as an overreaction.
Reasoning: Couch Investor mentions Palantir being "down a little bit" today within a broader market decline for big tech. Couch Investor does not provide a specific bullish or bearish thesis for the stock beyond this observation.
Reasoning: Couch Investor notes Core Weave is up today and believes there's "still a long growth way to go." Couch Investor states that Core Weave needs to demonstrate a "flipping happening with core reef margin-wise" to comfortably go back "above $100." Couch Investor also states that Core Weave is getting "zero love right now."
Reasoning: Couch Investor groups Microsoft with other big tech companies (Meta, Amazon, Nvidia) that Couch Investor believes are "very much undervalued" in the current market, especially compared to overvalued private AI companies.
Reasoning: Couch Investor draws a parallel between Meta's current situation and Google's a year ago, noting that Google doubled over a year, implying a similar potential for Meta. Couch Investor also mentions Google in the context of external compute deals for AI.
Reasoning: Couch Investor indicates that Axon's stock chart is "not normal" and believes it is currently "stretched" or expensive, even if Couch Investor acknowledges its long-term potential. This suggests a cautious stance.
Reasoning: Couch Investor mentions IREN as one of the NeoCloud players that is "up today" after being down yesterday. No further specific sentiment or action is provided by Couch Investor.
Reasoning: Couch Investor mentions Core Scientific as one of the NeoCloud players that is "up today" after being down yesterday. No further specific sentiment or action is provided by Couch Investor.
Reasoning: Couch Investor explicitly states, "I did buy an extra 10 shares or so yesterday" of Nebula, around $200 per share. Couch Investor notes that Nebula recently dropped 34-35% from its peak in June and believes it has an "insane amount of growth left."