Key Takeaways
- Meta Platforms, the owner of Facebook and Instagram, is becoming a powerhouse in the world of artificial intelligence (AI)
- The company is investing heavily in AI, with a focus on developing its own chips and data centers, as well as creating a large language model called Llama
- Meta’s AI efforts are aimed at keeping users on its apps for longer periods of time, increasing ad revenue, and potentially leading to new innovations and revenue sources
- The company’s AI focus may be misunderstood by investors, who may see it primarily as a social media business
- Meta’s AI investments could lead to significant long-term benefits, making it a potential win for investors who buy its shares
Introduction to Meta’s AI Efforts
When investors think of potential artificial intelligence (AI) winners, they may think of companies like Nvidia, which powers the revolution through its chips, or Amazon, which offers AI products and services through its cloud platform. However, another company is also becoming a major player in the world of AI, although it may not be immediately thought of as an AI company. As the article states, "Could this player be the most misunderstood AI stock on the market? Let’s zoom in and clear up any confusion." This company is Meta Platforms, the owner of popular social media platforms like Facebook and Instagram.
Meta’s Social Media Business
Meta has built a successful business through its social media platforms, generating billions of dollars in revenue from advertisers who place ads on its apps. With 3.5 billion people using at least one of Meta’s apps every day, it’s a prime place for advertisers to reach their target audiences. As the article notes, "The company generates billions of dollars in revenue as advertisers place ads for their products and services across these apps — it’s a place where they know they’ll find us, particularly since 3.5 billion people use at least one of Meta’s apps every day." However, in recent years, Meta has expanded its focus to include AI, developing its own chips and data centers, and creating a large language model called Llama.
Meta’s AI Focus
Meta’s AI efforts are focused on keeping users on its apps for longer periods of time, increasing ad revenue, and potentially leading to new innovations and revenue sources. As the article states, "Meta’s efforts are adding more features as well as a virtual assistant to its apps, and the idea is that this will keep us on these apps for longer periods of time — or prompt us to use the apps more frequently." This could lead to increased ad spending across Meta’s platforms, driving revenue higher. Additionally, Meta’s AI research may result in other innovations down the road that could expand its revenue sources. The company has forecast significant capital spending on AI in the coming years, with $70 billion to $72 billion expected in 2025, and "upward pressure" on capital expenditures in 2026 due to AI buildout.
The Potential Benefits of Meta’s AI Investments
The potential benefits of Meta’s AI investments are significant, and could lead to long-term wins for investors who buy its shares. As the article notes, "Today, some might misunderstand Meta and wonder why the company is investing so heavily in AI. But those who see these potential benefits and buy Meta shares may, along with Meta, score a win over the long run." With its AI focus, Meta is aiming to revolutionize advertising, quickly and easily creating winning ads for its advertising customers. This could lead to increased ad spending across Meta’s platforms, driving revenue higher. Additionally, Meta’s AI research may result in other innovations down the road that could expand its revenue sources.
Should You Buy Meta Platforms Stock?
Before investing in Meta Platforms, it’s essential to consider the company’s potential and the current market landscape. The Motley Fool’s Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now, and Meta Platforms wasn’t one of them. However, this doesn’t mean that Meta isn’t a good investment opportunity. As the article notes, "The 10 stocks that made the cut could produce monster returns in the coming years." It’s essential to do your own research and consider your own investment goals and risk tolerance before making any investment decisions. With its significant investments in AI, Meta Platforms may be a company to watch in the coming years, and its misunderstood AI focus could lead to long-term benefits for investors who buy its shares.
https://www.nasdaq.com/articles/could-be-most-misunderstood-artificial-intelligence-ai-stock-market