Meta is the best bet in tech shares - and has 'a lot of upside' even after a 127% surge as it remains cheap vs. peers, an Evercore strategist says

• Meta's stellar stock rally has room to run further, according to Evercore ISI's head of Internet research.
• Mark Mahaney thinks Meta is currently the "best play" in tech stocks as the stock remains relatively cheap based on some valuation metrics.

Meta Platforms shares have surged a staggering 127% this year, but the stock still has room to rally because it looks relatively cheap based on some valuation metrics, according to the head of Evercore ISI's Internet research team.

"Meta is actually still your best play," Mark Mahaney told CNBC on Wednesday. "I know it's had a huge year-to-date rally, but it's trading at 15 times GAAP (Generally Accepted Accounting Principles) earnings - it's the cheapest, high-quality large-cap tech stock out there."

"There's a lot of upside in that stock," he added.

Mahaney expects Meta's favorable "product cycles" to help quicken revenue growth, while its cost-cutting plans should boost profit margins.

Tech stocks have outperformed this year after a dismal 2022, benefiting from the hype over artificial intelligence as well as investor expectations that the Federal Reserve will soon end its aggressive interest-rate increases.

"They had been so whacked down last year in terms of their multiples, in terms of estimates and then you had RIFs – reduction in force – which just meant the multiples were de-risked, the estimates were de-risked," Mahaney said, explaining how valuation metrics had turned favorable for tech stocks this year.