Meta will generate more ad dollars than its competition, says Jefferies Brent Thill

For more on tech earnings, let’s bring in Brent Thill, Senior Analyst at Jefferies. It’s good to see you today, Brent. What do you see in the tone of tech going into these big earnings? The tone is really mixed. It’s overweight semis and hardware, and it’s really negative software. And I’m primarily a software analyst. So software’s down 2%. Semis are are up 16% year to date. So it’s it’s very different we’re we’re dealing with kind of beach weather and semis and hardware we’re dealing with Arctic blast inside software right now. And so I think it’s so negative in software it, it bodes well for a lot of these companies because everyone has been making so much money owning Dell only NVIDIA that they’ve had no time for me. They don’t really care about the group. And I think that’s a signal in the last year and a half, I haven’t seen it this bearish on software. So, you know, semis and hardware have been the area that investors have made the most money. They want to continue to ride those stories. But I think it at some point you’re going to see a transition inside tech back to software. I think everyone’s waiting for the summer, waiting for more AI data points. So it’s it’s, it’s, it’s again a tale of a beach and an Arctic blast and software. So it’s very mixed right now. And who wouldn’t rather be on the beach? Let’s start with Meta then about earnings. This week, you heard Steve Kobach. They’re talking a little bit about AI increasing engagement in Instagram and WhatsApp and and really all of its broader platforms. Talk to me a little bit about the opportunities with Meta. Yeah, Meta has some of the best checks. And Internet advertisers continue to go there because of the effectiveness of their platform. So we continue to see really high engagement. Advertisers are spending more money. There’s definitely been a shift to Meta, even away from Google and other social platforms. And the checks have been phenomenal, and they’ve been trending that way since last fall. And I think this goes through, you know, the privacy labs, the refocus in AI and the quality of the Instagram platform is like no other platform for advertisers to be on. So we continue to hear good things. They will generate incrementally more ad dollars than the rest of the industry. They effectively continue to be very disciplined on expenses. So Zuckerberg, every call opens up and says we have 3 billion people touching our platform every day and we’re focused on doing it efficiently. If he keeps with that tone and they continue to roll some of these innovations like they’re doing with Meta AI, there’s gonna be more users that want to be on the platform. So here and continued really, really good things from the field about where they set. I was speaking last hour with Deuter Bosa about Meta and whether it gets sufficient credit for its positioning in AI and and that it may be sort of a stealthy gainer in that area. Would you speak to that point and compare it on AI with, for example, Microsoft and Google? Yeah, I think they’re stealthier, I think if you think about where they sit, right. So if I’m sitting in my office, I’m not using Meta, I’m using Microsoft. So I look at Microsoft and Amazon as a great way to play AI for the enterprise and for the consumer world. Meta and Google and others are in a better position. So we kind of put our investors in different buckets of hey, this is more of a consumer facing story today. Overtime Meta can get into the enterprise. They have open source Llama, which is their one of their AI languages. We think that could be a really big business over time. So today it’s largely consumer faced and it could be over time they have a mini enterprise business inside the company. But today it’s, you know, simple things like you’re a small business and you want to have a sidewalk sale and you want to create a campaign. Well, with AI, you can create these campaigns with maybe out with not bringing in expensive video shoot and makeup artists and all these things to create, create the campaign. And finding people on the platform is another big thing. You think that the AI winner out of this group, though, is Microsoft. Why in in the enterprise and for a consumer, it’ll be meta. But for for the enterprise, Microsoft has led the charge. They’ve been out in front, they Nadella has nailed this. They have partnered with the best AI com, the open AI, and they’ve effectively ingrained in every single product manager that you’re going to have a copilot in every one of these businesses, from apps to infrastructure to security, all the way up and down the stack. And they’re monetizing this better than anyone in software. And they’re the most trusted right now, which is a huge thing in AI. And so for the enterprise, they will, Microsoft will win, and they are laps ahead of anyone else. And consumer Meta, Meta will be in a really good spot. Really appreciate your insight, Brent. Thank you for joining us today, Brent Thill.