Meta Platforms (META) and Amazon (AMZN) shares move higher after both tech players posted positive earnings results on Thursday. Bernstein Internet Research Analyst Mark Shmulik joins Yahoo Finance Live to break down the biggest Big Tech drivers for earnings season thus far, particularly Meta's outlook.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

AKIKO FUJITA: Well, shares of Meta and Amazon are extending gains today, hitting new highs in the session as investors cheer on their latest quarterly results. The strength in the fourth quarter driven largely by a rebound in digital ad sales. Amazon saw a 27% jump year on year, while Meta more than tripled overall sales from the same period last year with a big chunk of that coming through from ads.

Joining us now is Mark Shmulik, Bernstein internet research analyst. Mark, you know so much of this is about setting expectations. Certainly, investors liked what they saw yesterday after the bell. How do you sort of put these names that we've seen this week side by side to see why these particular names are being rewarded in such a big way today?

MARK SHMULIK: Yeah. Look, you've certainly seen divergence this quarter starting with Meta well at the top. Amazon certainly up quite a bit. Google was down by a similar amount that Amazon was up and of course, some of the others.

And I think the biggest reason for that is going into this year after the big year the Magnificent Seven have had last year, there wasn't a lot of like really great conviction about really good ideas of what do you own in internet and tech. And I think those companies that put up the numbers where it mattered most and kind of calmed the biggest fears or worries about specific names performed the best. Meta, the biggest question heading in to 2024 was do you really want to own Meta into a decelerating revenue growth environment? Can we really trust them to keep their costs in check? And then they put out a monster guidance to suggest that the question we should be asking is, how long can they keep this up?

And with Amazon there was certainly a lot of excitement and a lot of optimism that 2024 was going to be the year they're going to finally deliver that operating income inflection, you know, we've long held out hope for and that's exactly what they did. They put out a very, very strong beat on operating income for the fourth quarter. Their comments suggested that that operating income growth is durable you know and it's showing up in the guidance for Q1. And this is exactly what investors want to see right now.

RACHELLE AKUFFO: And Mark, you called Meta, especially for that quarter, the Patek Philippe of internet. Now, that's a pretty big statement to make given especially when you think about the price and the significance of Patek Philippe and their watches. Talk about what you're looking at there that sets Meta apart and what is going to keep them having that edge, as you mentioned. If they're going to be on top, what's going to keep them there?

MARK SHMULIK: Yes, as a watch aficionado still not wearing any watches. But you know, I think what stood out why I called it the Patek Philippe is really a couple of reasons, right? The famous Patek kind of slogan is you never really own one, you just hang on to it for a generation, you know. And the biggest complaint about longer-term investors with Facebook and now Meta has been there's always this view that there's an expiration date to social media.

And I think the more important thing I took away from this earnings was not the revenue beat and kind of guidance for 2024. That's great. You do need a strong core. But what they really showed is the longevity of this business, this vision you know that Mark has that we've all questioned at some points in the past.

The adjacencies are there. Threads usage is up, you know. Reels usage is up. WhatsApp is growing in the United States.

We've got north of 3 billion users. And Facebook Blue is still growing in the US. This isn't going anywhere. And longer term, all the investments in AI and the Metaverse, whether you believe in it or not, there's a pathway that this company is going to find a way to be around forever. And so just like Patek, my comment here is you can own Meta's stock and you can hand it down to your kids.