Wedgewood Partners credits Meta Platforms for strong Q3 AI performance

Wedgewood Partners identified Meta Platforms, Inc. (NASDAQ: META) as a standout performer in its third-quarter 2026 portfolio, citing 28% revenue growth and a positive market reaction to new artificial intelligence products. The investment management firm released its Q3 2026 investor letter, noting that Meta’s recent innovations contributed to its strong showing despite broader market pressures.

The Wedgewood Composite delivered a net return of 2.5% for the quarter, slightly outperforming the Standard & Poor's 500 Index at 2.3% and the Russell 1000 Growth Index at 0.9%, though trailing the Russell 1000 Value Index at 2.6%. Wedgewood Partners attributed equal-weighted S&P 500 underperformance to surging Treasury yields and macro headwinds that pressured rate-sensitive stocks. Conversely, the firm noted that AI resilience and mega-cap technology stocks pushed the NASDAQ 100 to record highs, even as rising inflation, energy price spikes, and higher interest rates continued to weigh on broader equities.

In the letter, Wedgewood Partners stated that Meta’s market reception of its AI updates was favorable, contrasting this with a historical tendency for the market to ignore or penalize the company's successful product launches. The firm referenced Meta’s Threads app, which it noted has over 500 million monthly active users three years after its launch. While acknowledging that Metaverse investments provide a reason for skepticism regarding management's track record, Wedgewood Partners argued that these investments are not a valid reason to discount the company's other significant successes.

A key focus of the quarter was Meta’s rollout of the Muse Agent, a tool users can set on autopilot to handle tasks such as lowering phone bills or renewing license plate tags. The firm described the Muse Agent as operating in tandem with a private virtual machine that it estimated to be worth $500 to $1,000, which is provided to users for free to maintain privacy and security. Wedgewood Partners characterized the execution of the Muse Agent as among the best since OpenAI launched ChatGPT, citing Meta’s advancements on the large language model frontier and its history with encryption through WhatsApp.

The firm expressed confidence that Meta has several more AI products and investments in its pipeline that will generate returns comparable to past years. As of October 15, 2026, Meta Platforms closed at $736.72 per share with a market capitalization of $1.88 trillion. The stock had posted an 11.61% year-to-date gain, trading within a 52-week range of $520.26 to $779.82.

Hedge fund interest in Meta remained high, with 254 portfolios holding the stock at the end of the second quarter, down from 262 in the previous quarter. Despite acknowledging Meta’s potential, Wedgewood Partners noted its belief that certain other AI stocks offer greater upside potential with less downside risk.