Suncoast Equity Management, an SEC-registered investment advisory, identified Meta Platforms, Inc. as a leading contributor to its U.S. Equity Large Cap Select Growth Strategy in a Q3 2026 investor letter. The strategy advanced 4.2% after fees in the third quarter, outpacing the S&P 500's 2.3% return. This performance marks a narrowing gap between portfolio earnings per share growth and returns, following a period where the fund lagged the S&P 500 over the four quarters ending June 30, 2026.
The letter argues that Meta's recent product developments are shifting investor sentiment regarding the company's heavy artificial intelligence capital expenditures. Suncoast Equity Management noted that investors have previously penalized Meta for concerns that its AI spending might not generate adequate returns. However, the firm stated that new AI-enabled products demonstrate how quickly potential economics can change. Specifically, the letter highlighted that Muse has been the most downloaded app on Apple and Android devices since its introduction in September, with early user reviews described as favorable.
According to the investor letter, AI has already improved Meta's advertising effectiveness. Suncoast Equity Management suggested that if these technologies create new revenue streams, the company's current spending could increasingly be viewed as a savvy investment. The firm acknowledged that it is too early to determine specifically how much Meta will monetize Muse but pointed to the stock's rapid recovery during the quarter as evidence of a disconnect between price and fundamentals being corrected. The letter noted that Meta remains a powerful global advertising platform with earnings expected to grow 35% in 2026, while trading at a price-to-earnings ratio below the market average.
As of October 7, 2026, Meta Platforms, Inc. shares closed at $721.31, resulting in a market capitalization of $1.84 trillion. The stock posted a 9.51% year-to-date gain and traded within a 52-week range of $520.26 to $779.82. The strategy has risen 14.5% after fees since March, a performance Suncoast Equity Management linked to promising investment opportunities provided severe macroeconomic conditions do not arise.
Data from Insider Monkey indicates that 254 hedge fund portfolios held Meta Platforms, Inc. at the end of the second quarter, a decrease from 262 in the previous quarter. While the source acknowledges Meta's potential as an investment, it asserts that certain other AI stocks offer greater upside potential and carry less downside risk. The letter also references a separate suggestion by Dan Niles that Meta could monetize its AI spending by launching a public cloud business to compete with Amazon, Microsoft, and Google.