American Resilience Model Portfolio

Portfolio Update: January 15, 2026

Publication date: January 15, 2026

Current portfolio holdings

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Executive summary

• We are adding Meta Platforms (META) to the American Resilience portfolio as a 5% position.

• We are removing Roper Technologies (ROP) from the portfolio as a 5% position.

• META shares are down more than 20% from their mid-August peak, reflecting investor concerns about aggressive capital spending on AI.

• META is now by far the cheapest of the Mag 7 stocks on typical valuation metrics—and even trades slightly under the S&P 500 earnings multiple.

• The core advertising business continues to generate healthy growth, reflecting successful internal deployment of its own AI technology.

• The company’s LLaMA AI model is one of the world’s premier AI models and will help META play a leadership role in agentic AI— the next major step forward in the AI revolution.

• ROP is a solid niche software company with various strengths, but we have less conviction in its ability to prosper in the evolving AI landscape.

Performance discussion

The American Resilience portfolio has generated a total return of 3.0% through January 14, 2026, versus the S&P 500 Index return of 1.2%.

The purpose of this portfolio update is to report the addition of Meta Platforms (META) with a 5% portfolio weighting. META replaces Roper Technologies (ROP), which has been removed from the portfolio.

Within the American Resilience portfolio, we have previously added positions in AI leaders when we felt the market underappreciated the stock’s growth prospects. We added Oracle (ORCL) on July 12, 2024 (up 36%). We added NVIDIA (NVDA) on March 12, 2025 (up 58%).

We see similar dynamics at work with META today. A recent pullback in sentiment has created a compelling valuation for a dominant technology franchise that is strongly aligned with long-term AI growth trends—despite improving fundamentals and clear evidence that AI investments are already delivering returns.

A premier producer and consumer of AI

META is both a producer and a large-scale consumer of AI, uniquely positioned to convert advances in AI into immediate economic returns across its global platforms.

We believe the market is currently underappreciating how meaningfully AI is already enhancing the company’s fundamentals—and how powerful its long-term positioning has become.

META generates more than $50 billion in quarterly revenue, with operating margins still near 40%, giving it the cash flow and balance sheet strength to invest aggressively while continuing to deliver strong earnings growth.

At the center of this strategy is Large Language Model Meta AI (LLaMA), its family of foundational AI models. By keeping LLaMA open and highly efficient, META accelerates innovation while rapidly deploying improvements across its leading social and communication platforms, including Facebook, Instagram, and WhatsApp.

These AI models are driving better ad targeting, creative optimization, and content recommendations, supporting mid-20% advertising revenue growth and measurable gains in advertiser ROI. At META’s scale, even small AI-driven improvements translate into billions of dollars of incremental revenue.

Future leader in “agentic AI”

The next phase of the AI revolution is the rise of AI agents. AI systems move from simply answering questions to taking action.

Instead of just generating responses, AI agents can plan steps, make decisions, and complete tasks for users. This could include handling customer support, booking appointments, managing online purchases, or running marketing campaigns.

As these agents become more capable and better integrated into everyday platforms, AI shifts from being a helpful tool to a practical assistant that saves time, boosts productivity, and enables entirely new ways of doing business.

META’s ongoing investment in LLaMA positions the company to win as AI agents become more relevant across the economy over the next several years.

Messaging platforms like WhatsApp and Messenger already connect billions of users with tens of millions of businesses, making them a natural home for AI-powered agents that handle customer service, commerce, and lead generation.

These agents have the potential to expand monetization beyond ads through paid messaging, business tools, and higher advertiser spending, while also reinforcing customer engagement.

Compelling valuation

META’s elevated investment levels—over $100 billion in projected annual capital expenditures as AI infrastructure scales—reflect a deliberate long-term strategy.

While these investments pressure free cash flow, META has repeatedly demonstrated an ability to convert heavy upfront spending into durable revenue streams, as seen with Stories and Reels, which now generate tens of billions in annual revenue.

Free cash flow is expected to decline over the next two years as META invests heavily in AI infrastructure, but it is expected to return to 2024 peak levels by 2028, driven by revenue growth. At that point, META should find itself in a position to grow free cash flow even as it continues to invest as heavily in AI as any other major player in tech.

From the perspective of more short-term oriented investors, the acceleration in capital spending is seen as a negative. This has led to substantial pressure on META’s share price over the last several months.

META shares are now down 21% from their all-time high reached on August 14, 2025. META has significantly underperformed the S&P 500 since then, which advanced 7%.

META vs. S&P 500

(Total Return - One Year)

The market’s adverse reaction to META’s aggressive spending plans has made META by far the cheapest stock within the Mag 7 universe across profitability metrics.

META now trades at just under 21 times consensus earnings estimates for 2026. The median Mag 7 stock trades at 30 times. META even trades below the average S&P 500 2026 P/E multiple, which is currently just north of 22.

Mag 7  Valuations

META can always pivot

META shares are being punished for the company’s commitment to heavy growth investment, but the company has the ability to pare back its capital spending to the extent it decides it is excessive.

We see a template for this in recent reports that META is transitioning away from its heavy investment in Reality Labs, its virtual reality R&D initiative, toward more direct AI-related expenditure.

From a valuation perspective, the losses being incurred within Reality Labs actually represent an added layer of discount. Over the past four quarters, META reported over $18 billion of operating losses from the initiative, versus over $100 billion of operating profits from the rest of its business.

In other words, META’s earnings are already substantially depressed from this entirely voluntary investment in Reality Labs (which management still views as a driver of long-term growth). The low earnings multiple is based on this reduced earnings number.

Hypothetically speaking, if META abandoned Reality Labs altogether tomorrow, its short-term earnings outlook would surge.

An immensely profitable and growing core

While META’s heavy spending on both AI and virtual reality has invited much criticism and pressured the share price, shareholders now get the benefit of a stock that appears quite cheap relative to its long-term growth prospects.

Underneath it all is one of the most powerful advertising platforms in the world, which is only getting better with AI adoption.

META uniquely combines frontier AI leadership with unmatched global distribution and immense financial firepower. We believe the current valuation does not adequately reflect the durability of META’s cash flows or the long-term upside potential of its AI strategy, creating a compelling entry point.

Removing ROP

While ROP is a well-run niche software company with loyal customers and a solid acquisition strategy, we have less confidence in its ability to benefit from rapid changes driven by AI. As AI advances toward more autonomous, agent-based systems, the risk to narrowly focused software tools is increasing.

Many of ROP’s products serve specific workflows with established pricing models. As AI agents become capable of handling broader tasks end to end, customers may delay software decisions or question the need for standalone applications altogether. This introduces uncertainty around future growth and pricing power, even for businesses with historically sticky relationships.

ROP’s organic growth has also lagged software peers, and recent performance has been held back by cyclical and end-market pressures. Valuation remains broadly in line with faster-growing peers, limiting upside if growth does not improve.

In a market increasingly focused on clear AI beneficiaries, we believe capital is better deployed in companies that are positioned to directly benefit from AI-driven productivity and platform-level adoption. As a result, we are removing ROP in favor of an opportunity that we believe has stronger alignment to the next phase of AI-led growth.

Key metrics

Valuation detail

Performance detail

Meta Platforms (META)

The 76research American Resilience Model Portfolio is designed to provide exposure to growth businesses that operate with competitive advantages in structurally attractive markets. The objective is to identify businesses that can survive and thrive across different macroeconomic environments and whatever geopolitical crises may unfold. The holdings are intended as long-term investments to drive portfolio compounding with minimal need to realize taxable gains. Emphasis is placed on critical markers of business quality such as barriers to entry, physical scarcity of assets, balance sheet strength, effective capital allocation and durable long-term growth drivers. These assessments are paired with careful consideration of valuation and risk.    

Disclaimer

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