Meta Should Get Out of Metaverse, Says Laffer Tengler CEO

Laffer Tengler CEO Nancy Tengler stated that Meta Platforms needs to completely divest from its Metaverse strategy to unlock shareholder value, calling the initiative a "distraction" with unclear commercial viability. In a broad discussion regarding the technology sector, Tengler also dismissed fears of an artificial intelligence market bubble and highlighted the critical importance of physical infrastructure in the ongoing AI boom.

Key Points

• Meta Strategy: Tengler argues Mark Zuckerberg should "pull the Band-Aid off" and abandon the Metaverse to focus on high-demand hardware like Ray-Ban smart glasses.
• Market Health: Technical indicators suggest the tech sector is not in a bubble, with fewer stocks trading above their 200-day moving averages compared to 1999.
• Infrastructure Growth: Microsoft and other tech giants are facing community resistance regarding data centers, similar to the pushback Tesla faced during its Texas expansion.
• Top Picks: Laffer Tengler’s "Best Ideas" for 2026 include Alphabet, Walmart, AMD, CrowdStrike, and Quanta Services.

Meta's Pivot: From Virtual Reality to Smart Hardware

Despite recent restructuring at Meta Platforms, which included job cuts within its Metaverse division, investors remain skeptical of the company's continued commitment to virtual reality. Tengler, whose firm holds a minimal net position in the company, emphasized that the social media giant’s focus should shift entirely toward tangible products where consumer demand is proven.

Recent reports indicate that EssilorLuxottica, the manufacturer of Ray-Ban, is in talks to significantly increase production of Meta’s smart glasses. Installed capacity currently sits at 10 million units, with discussions underway to double that figure to 20 million, potentially reaching 30 million units if demand persists.

"The sooner Zuckerberg gets Metaverse out of the vocabulary in the headlines, the better off it is for the company. I never really understood the pivot to the Metaverse... it seemed too highly distracting and the commercial value was not clear. I think he's doing the right things, but he should pull the Band-Aid off and be done with it."

Tengler noted that while she was initially skeptical of the smart glasses market, the clear demand signals suggest this is the correct avenue for Meta’s hardware resources, rather than the nebulous Metaverse concept.

Debunking the AI Bubble Theory

Addressing concerns that the surge in AI-related stocks mirrors the dot-com crash of the late 1990s, Tengler provided data to refute the comparison. During the peak of the tech bubble in 1999, between 70% and 90% of technology stocks were trading above their 200-day moving average. In the current environment, that figure stands at roughly 62%.

Furthermore, backlogs for "build-out names"—companies involved in nuclear energy, grid construction, and data center development—remain robust, suggesting sustained demand rather than speculative hype.

The Infrastructure Challenge

As companies like Microsoft expand their physical footprint to support AI compute needs, they are encountering "NIMBY" (Not In My Back Yard) resistance similar to what the clean energy sector faces with wind and solar farms. Tengler praised Microsoft CEO Satya Nadella for anticipating these friction points by launching community goodwill initiatives ahead of major construction projects.

"It's not the first time we've heard resistance. Tesla got a lot of pushback when they moved to Texas... it was disruptive. We're seeing the same thing to a lesser extent with data centers. But this is what happens in a transformative economy."

Strategic Outlook: Alphabet and Top Picks for 2026

Beyond infrastructure, the software and service layer of the AI economy continues to evolve. Tengler cited a significant partnership between Apple and Google as a validating moment for Alphabet, cementing its status as a leader in AI. Consequently, Alphabet remains one of Laffer Tengler’s "12 Best Ideas."

Looking toward 2026, the firm is positioning itself in companies that benefit from AI tailwinds, productivity growth, and infrastructure spending. The firm highlighted a 4.9% increase in productivity last quarter—outpacing GDP growth of 4.3%—as a key economic driver that will suppress inflation without hurting the consumer.

The firm’s high-conviction holdings for the coming years include:

• Walmart: Entering the Nasdaq and investing heavily in AI.
• AMD: A key player in the semiconductor space.
• CrowdStrike: Expected to see growth driven by AI security needs.
• Tesla: Categorized alongside major tech innovators.
• Quanta Services: Critical for building out the electrical grid and data center support.
• D.R. Horton: A strategic bet on the housing market.

Investors will likely watch the upcoming earnings season closely to see if the reported skyrocketing of new business applications translates into the revenue growth Tengler anticipates across these sectors.