What was the big story with Meta Platforms ' (NASDAQ: META) first-quarter update? Some might say that it was the company's increased capital expenditures on artificial intelligence (AI) infrastructure. Others could vote for Meta's strong revenue and earnings growth. I think, though, that the most important story from Meta's latest investor update with a long-term perspective is something CEO Mark ...
What was the big story with Meta Platforms ' (NASDAQ: META) first-quarter update? Some might say that it was the company's increased capital expenditures on artificial intelligence (AI) infrastructure. Others could vote for Meta's strong revenue and earnings growth. I think, though, that the most important story from Meta's latest investor update with a long-term perspective is something CEO Mark Zuckerberg briefly mentioned. Zuckerberg just hinted at the next big thing in AI. And investors who pay attention to what's happening could profit tremendously. Image source: Getty Images. Continue reading
mesh cube/iStock via Getty Images The Invesco Large Cap Growth ETF ( PWB ) is a passive index-tracking fund based on the dynamic large-cap growth Intellidex index . Relatable to its name, the fund seeks capital appreciation in the form of having exposure to growth-based large-cap entities. As a result, the fund would naturally appear to be expensive on trailing multiples. That's not an issue, howe...
mesh cube/iStock via Getty Images The Invesco Large Cap Growth ETF ( PWB ) is a passive index-tracking fund based on the dynamic large-cap growth Intellidex index . Relatable to its name, the fund seeks capital appreciation in the form of having exposure to growth-based large-cap entities. As a result, the fund would naturally appear to be expensive on trailing multiples. That's not an issue, however, if the underlying can really grow earnings/cash flows over time at an above-market rate of returns; naturally, paying higher multiples won't hurt. Eventually, investing is forward-looking, and what matters is how much cash flow you might be getting by investing at the current price. However, the issue is that current valuations are more reflective of optimism, liquidity, and speculation rather than the tangible cash flow earnings that might be possible going forward. The large caps, dominated by technology companies, are at present operating in an intensely competitive industry. This implies that a lot of R&D, technological productivity development, and growth would eventually be passed on to consumers rather than the entity. At the same time, current valuations leave very little room for margin of safety. The investment thesis is based on growth prospects rather than present earnings power. The earnings yield of large-cap growth equities is at historically lower levels, with their book multiples at historically higher levels. And the more returns these equities generate over recent time, the offset would be in the form of lower forward returns. This is an important point that investors should reflect on, and I will also emphasize it further. Investors have a tendency to extrapolate recent performances, which leads to trouble eventually. There is no economic sense that the same asset class bought at higher valuations should be more attractive than the same asset bought at a lower valuation. But narratives and recency often carry more influence than the underlying funda...