Forget Meta: This Tech Stock Is Set for a Bull Run in 2024

Meta stock (NASDAQ:META) surged by over 20%, falling back slightly this week. And if you’re expecting another surge, think again.

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Meta Platforms (NASDAQ:META) surged by an insane amount last week as the company made a few special announcements. Meta stock climbed by over 20% after announcing not just strong results, but also a shiny new dividend.

Yet shares across the board, including Meta stock, fell back Monday. Meta stock fell by about 2% on Monday, which of course isn’t that much. However, investors may be starting to think the stock is overvalued. So let’s look at what happened, and another potential tech stock to buy instead.

What happened

Meta stock climbed after reporting the tech company tripled fourth-quarter profit, and as mentioned issued its first-ever dividend at US$0.50 per share per quarter. Revenue rose 25% compared to the same time the year before at US$40.1 billion, marking the fastest growth rate since 2021. Meta stock went on to forecast first-quarter sales between US$34.5 and US$37 billion.

Now it wasn’t only the dividend that had investors interested in Meta stock. The company also announced a buyback of US$50 billion, coming after cash and equivalents climbed to a whopping US$65.4 billion.

The dividend was more than just a fun payout for analysts, however. It showed “maturity” and a “symbolic moment” for Mark Zuckerberg, chief executive officer of Meta stock. After a rough 2022, the company made incredible cuts and is now focused on creating sales beyond its Facebook platform.

Still work to be done

It was an absolutely perfect quarter, however. Meta stock still needs to show growth in a few ways. This includes in the sector of artificial intelligence (AI), where others in the Magnificent Seven are far ahead. Furthermore, some have questioned whether the company’s investment into the metaverse had really paid off.

Sales in Meta stock’s Reality Labs climbed to US$1 billion, but it reported an insanely high US$4.7 billion loss in virtual reality for the quarter. So while the company may have cut over 20% of its workforce, losses still abound. Even so, it certainly has shown progress. The question is whether it still offers value for today’s investor.

Shares too high

Meta stock is an excellent company that has shown a lot of maturity in the last two years. So it’s not that I don’t like the stock, but it certainly is overvalued at the moment. Even after shares dropped by over 2% on Monday.

Instead, it may be worthwhile to consider a Canadian stock that continues to thrive and expand in the AI field. That’s OpenText (TSX:OTEX), which recently dropped despite demonstrating solid earnings.

The enterprise information management software company reported a 71% increase in revenue year over year to US$1.5 billion, beating out estimates. This came mainly from a 58% increase in recurring revenues, as well as from its license business. Strong deal strength and cloud bookings, coupled with a higher full-year cloud bookings outlook therefore show the company likely has a strong year ahead.

The issue at hand is the full-year earnings before interest, taxes, depreciation and amortization (EBITDA) is lower for licenses, and there was no increase in cloud revenue despite these strong bookings. Furthermore, the company needs to make more progress with its Micro Focus acquisition, according to analysts. Though once it returns to growth after making operational changes, this could be a huge tailwind for investors.

Bottom line

Meta stock created a huge surprise by announcing a dividend and buyback. But if you’re expecting another share surge, I wouldn’t hold your breath. However, OpenText stock could certainly see that surge in the next year. Which is why now is a great time to consider the stock after falling back 5% after earnings. What’s more, it already offers a dividend! So once it returns to year-over-year organic growth, you’re going to wish you had this stock on hand.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Meta Platforms. The Motley Fool has a disclosure policy.

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