♾️ Executive Summary

Meta Platforms (META) is the "Operating System of Social Connection." By open-sourcing Llama (its foundational AI model), Meta is commoditizing the layer below it (Models) to drive value to the layer above it (Applications/Ads). This is the classic "Commoditize Your Complement" strategy executed at massive scale.

[!IMPORTANT] Investment View: Strong Buy. Meta is the most efficient executor in Big Tech. The "Year of Efficiency" proved Zuckerberg's ability to pivot, and Llama is becoming the Linux of AI.

1. The Open Source Strategy (Llama)

While Google/OpenAI keep models closed, Meta gives Llama away for free.

• Standardization: By making Llama the industry standard, Meta ensures the developer ecosystem builds on its stack, preventing competitor lock-in.
• Talent Magnet: Top researchers want to publish and share; open source attracts the best minds.
• Cost Reduction: Meta uses these models internally to optimize ad targeting and content ranking. Better models = Better Ads = Higher ROAS.

2. The Core Family (Facebook, Instagram, WhatsApp)

The "Family of Apps" reaches ~4B people daily.

• Reels: Successfully countered TikTok. Engagement is at all-time highs.
• WhatsApp: The sleeping giant of monetization. "Click-to-Message" ads are now a multi-billion dollar run-rate business.
• Threads: A low-cost option on the decline of X (Twitter).

3. Reality Labs (The Metaverse Bet)

Zuckerberg burns ~$15B/year here, but the vision is sharpening.

• Ray-Ban Smart Glasses: The sleeper hit of the year. Multimodal AI on your face is the first killer app for AR.
• Quest: Remains the dominant VR headset, though the market is still niche compared to mobile.

⚠️ Risks to the Thesis

1. CAPEX Spend: Meta plans to spend heavily on H100s. If revenue growth slows, Wall Street will punish the "reckless spending" narrative again.
2. Regulatory: Child safety and privacy regulations (EU DMA) constantly threaten the ad model.
3. TikTok Survival: If TikTok is NOT banned in the US, it remains a formidable competitor for attention time.

Conclusion

Meta is a unique beast: A Founder-led compounder with the discipline of a PE firm. The core ad business is creating enough cash to fund the biggest AI science project in history (Llama/AGI), and it's working.