A tech-focused research firm says Wall Street may be overlooking one Mag 7 name that’s already generating billions of dollars from its AI efforts.
In a new CNBC interview, Rosenblatt Securities senior research analyst Barton Crockett says the market has rushed to crown Google (GOOGL) as the dominant force in large language models.
This week, GOOGL has surged to a new all-time high of $328, pushing the company to a near $4 trillion valuation following the launch of Gemini 3.
According to Crockett, the market appears to have priced in that Google is now the king of AI, while assuming other platforms will fall behind.
“So what I think the market has done with Google is they have sprinted to the notion that LLMs AI will be a winner-take-all. They have priced that into the stock, and they have looked at others and they have said, ‘You know, you guys are losers.’”
But Crockett says he’s comfortable in making a contrarian call that Mag 7 stock Meta (META) is still in the thick of the race.
“And look, I would lean against that today in this way, which is, I would think a lot about Meta. I think it is hard to find a company that has a clearer ROIC (return on invested capital) on AI spend argument than Meta. The AI spending has accelerated their ad growth into the 20%, 25% range. They have talked about $60 billion of annualized recurring revenue from their end-to-end AI performance ad tools. AI is revolutionizing the direct marketing advertising space, and Meta is a great play on that.”
He notes that Meta’s investment cycle is also ramping sharply, with a spending surge that could be fully covered by the revenue from its AI tools.
“And if their CapEx goes from $40 billion in 2024 to over $100 billion next year, that is $60 billion to spend, and they are arguably covering that just with the ARR (annualized recurring revenue) from their performance tools.”
He also expands the picture to Meta’s broader AI ambitions, including personalized systems and rising platform engagement.
“And that is not providing any credit for the call options on other things, like maybe personalized AI does lead to something, which is their vision. Certainly, it has helped engagement from users within their website and helped them in myriad other ways.
They are getting a great return on investment from this spend, and the market should be applauding that.”
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