Meta benefits from an AI slowdown; core ads monetize independently of frontier AI, so lower capex improves FCF/margins while revenue stays strong.

Meta will be one of, if not the top benefiting company from an overall coordinated AI slowdown.

The only company that's really spending on it as an indirect way of creating revenue is Meta. And the ways that Meta actually makes money from AI, their core business, that'll continue to monetize.

They can continue making improvements on that without the leading AI. Meta does not need to be on the bleeding edge to monetize their core assets directly.

So Meta is in this unique spot where it's a company that is growing revenue faster than almost any other big tech company. It's not growing as fast as the AI labs themselves, but it's growing very quickly.

The revenue grew 27% year-over-year on a trailing 12-month basis.

Yet, even with this incredible revenue growth, Meta Stock really hasn't been rewarded. It's been flat all year, hasn't made any gains, and it continues to trade at a very low valuation optically.

And the reason why is because of this the capex investors look at all this capital expenditures and they can't link it to a direct revenue stream.

If there was this coordinated slowdown, Meta would spend less on capex. Their future growth plans would be tapered in a little bit. They'd continue to spend, but it would be at a much slower pace.

But yet, their monetization would likely not slow down at all because Meta has more than enough capacity to continue monetizing their core businesses and continue growing them.

And that would likely end up with the stock rerating. and Meta stock could easily be rerated. Meta currently trades at a 21 PE ratio. So if we did get this coordinated slowdown, Meta has probably the best setup.

It has incredible revenue growth that will continue even with a capex slowdown. The capex slowdown would make the margins and the free cash flow profile improve of the company and it would make investors less concerned about Mark Zuckerberg's willingness to spend endlessly on AI.

It'd be another third party factor reigning him in. All of these would likely be appreciated by the market, at least in the short term.

But if you actually look at it this way, what Mark Zuckerberg's doing has reduced risk in Meta. It's made the investor more safe in their future earnings. He's made it so that if AI becomes commoditized, all of that acrru to Meta's already huge formidable businesses.

There'll be more shopping, more commerce, more people using advertisements on Meta. And if it doesn't commoditize, well, he has his own AI. Either way, he has further insulated the future of meta and reduced risk in the process.

Zuckerberg's goal is to make it so it's easier for people to book airline tickets, make dinner reservations, and edit photos. He will use AI to drive down the cost of serving his users to zero and thus to drive up his revenue by improving ads.

He will use cash from his ad business and his ownership of data centers, chips, and infrastructure that Anthropic and OpenAI have to pay to rent to undercut them on price.

And the potential install base, the 3.6 billion people that use Meta products every single day, they don't care whether or not the AI model is within 6 months of the frontier. They just care that they can get their dinner reservation booked or their photo edited.

Mark Zuckerberg is giving people exactly what they want. And he's giving them the best part of AI without all the fear.

Meanwhile, Zuckerberg is creating the most relevant products in people's minds that help them solve all the annoyances that AI really should help people solve. And so far, this has received incredibly good results.

It's fairly new, but it's in the app store right now with 4.9 stars and 3,800 ratings. So, it has a ways to go, but even the initial impressions so far are incredibly bullish. People really like it.

And one thing that Meta can do is continually push it out to more and more people. They made even secondhand websites like Threads have hundreds of millions of daily active users.

They'll be able to do the same thing with this app so long as it really captures all these agentic use cases for individuals.

Another aspect of why Meta is such a strong candidate of being a company that would benefit in this slowdown. Meta in general is a company that has always pivoted with every transition.

Mark Zuckerberg doesn't get a lot of credit for this, but it's actually been incredible to see what they've been able to do.

If we look at a quick history here, after every period, Zuckerberg somehow managed not only to survive, but emerge with a strengthened position, having conquered more than he previously held.

By the end of 2013, he built one of the two most profitable mobile ad businesses in the world. By the end of 2017, he crushed Snapchat by copying its killer innovation with Instagram stories.

By the end of 2020, the widely predicted death of Facebook was revealed as a fantasy as the number of daily active users has grown during each quarter of political scandal. Advertisers never left and Facebook paid the FTC 5 billion privacy settlement.

By the end of 2025, he survived the Tik Tok threat by cloning it with reals. He circumvented Apple's AT, the app tracking transparency that was a massive threat to Facebook. He circumvented it by rebuilding targeted ads with large AI models.

He beat the FTC's attempt to break up the company, which the agency has appealed and saved cash by weathering mass layoffs. While Meta hit a record market cap of nearly $2 trillion, he done it while refusing investors demands to cut Reality Labs division, where the metaverse lived.

This revisionist history that Mark Zuckerberg is not a good capital allocator because he's spending a lot of money on AI is not only ridiculous, but it's wrong on the surface. Look at how he's pivoted his business and where he's put capital before.

Every single time the business has grown dramatically. You can highlight any mistake from any company, but that does not prove that they're a bad capital allocator.

And one thing that a study of Meta's history actually shows is that Meta is long-term focused. Mark Zuckerberg isn't trying to harvest meta. He's not there trying to get as much cash out of it as he can.

He's trying to compete for the future. He's still in growth mode. He has no interest in milking Meta for whatever it's worth and then handing it off to the next investor after he builds his island or whatever he wants to do.

Mark Zuckerberg is highly competitive. He's still in it. He says himself, quote, "I'm not slowing down." Every single day, he's focused on the company and growing it for the future.

You can see this in the way that he will dramatically pivot the business even at the dismay of short-term focused investors.

When Meta realized that they were behind an AI and Mark Zuckerberg realized that this was a very pressing matter, look at how fast he made changes. Thus, in the first board meeting after the release of Llama 4, he announced a plan of a regime change.

The 11 weeks that followed demonstrated the sheer power of his position as the undisposable head of a galactically resourcerich empire. He subsumed fair into a new organization.

He called it meta super intelligence, MSL, and reset the market compensation for top AI recruiters to hundreds of millions or billions of dollars per head.

Now, not mentioned here is that not only was he paying them hundreds of millions of dollars, Mark Zuckerberg himself was on the phone calling these AI researchers. Some of them thought it was like a fake call or a scam call because it was someone saying, "Hey, I'm Mark Zuckerberg.

I own Meta. I I want you to come work for me. Some of them really couldn't believe it. He paid $ 14.3 billion for stake and scale AI and installed its founder, Alex Wing, as Meta's head of AI, who by the way, Alex Wing is every single day on X talking about the AI developments, trash talking competitors.

He is at the forefront of this every single day. He's not slowing down at all. This is to him the biggest race that he could be in and Mark Zuckerberg has given him every resource to continue.

He recruited the chatbt co-creator Shangjaya Zhao from former GitHub chief Nat Friedman, the safe super intelligence co-founder Daniel Gross and picked off a dozen of other defectors from OpenAI, Anthropic and Google DeepMind.

He cut hundreds of employees from the older organizations. Within one quarter, MSL was up and running.

The speed at which Meta radically altered their organizational structure and built a super intelligence lab to now directly compete within six months of the top AI models is record time.

In fact, I've never seen a company this big be able to change route that quickly.

But Zuckerberg can because he's not just the CEO of Meta. He is the owner. He is the outright voter. He has the controlling shares. What Mark Zuckerberg says is what goes. And what he says is he's going to be a leader in AI and he's not going to talk about the doomsday of it.

In fact, he's going to do the opposite and talk about how it's going to be highly beneficial for his 3.6 billion users.

In a coordinated slowdown, Meta will have a better balance sheet, more free cash flow, and they'll still be able to develop highly applicable technology to the huge majority of their users.

Now, again, I think that Meta will be fine either way. Even if there isn't a coordinated slowdown and Meta continues on their path, they're making incredible progress.

Meanwhile, they're not just asking for them to slow down. They're asking for companies like Meta to slow down. Meta is in a very different situation. Meta is flush with cash. Meta is a economic cash printing machine.