Some opportunities don’t come around every day, and that means when they do pop up, we should seize them. Right now, a particularly great opportunity exists in the world of investing, and it’s the chance to get in on a pioneer in a potentially game-changing technology, for a dirt cheap price. I’m talking about a company that’s making artificial intelligence (AI) its focus this year, setting itself up for leadership in this high-growth area.
The AI market is forecast to surpass $1 trillion by the end of the decade, and companies that invest wisely today may benefit down the road. Acting now could translate into significant earnings growth over time, boosting share prices and the portfolios of all of those investors who got in on these growth stories early.
So let’s take a closer look at the once-in-a-generation investment opportunity sitting before us right now, an AI growth stock to buy hand over fist.
Image source: Getty Images.
This player is Meta Platforms (NASDAQ: META), a company you may best know for its social media apps Facebook, Messenger, WhatsApp, and Instagram. Meta is the world’s social media leader, with more than 3.1 billion people using at least one of its apps every day.
And this is exactly why advertisers rush to Meta to run their campaigns, aiming to reach us, their audience, where they know they can find us. Advertising revenue makes up most of Meta’s revenue, so it’s critical to keep them coming back — and to do this, Meta has to ensure social media users remain engaged and spend more and more time on the apps.
And this is where AI comes in. Meta is investing heavily in the technology, with the idea of rolling it out across current and future products and services. Chief executive officer Mark Zuckerberg wants Meta to offer users AI suited to their needs — from an AI assistant to help them with daily tasks to AI suited to business needs like customer support. Last year, the company launched Meta AI, a conversational assistant, in beta across its apps in certain locations.
Meta’s large language model (LLM), Llama, trained on vast amounts of data, helps make these innovations possible. Meta, aiming to have enough capacity to keep powering its AI projects, expects to have 600,000 graphics processing units (GPUs) on board by the end of the year. And the company said AI will be its biggest area of investment this year too.
Meanwhile, Meta isn’t keeping Llama all to itself. The company has an open-source software policy, meaning anyone can use this LLM, and at the same time, Meta keeps its own projects proprietary. Here’s why this is a smart idea. Open sourcing means Meta gains access to feedback that helps improve its platform, and it encourages many to try the platform, which may put it on the road to becoming an industry standard.
Now let’s consider how this can help boost earnings over time. By adding AI tools and features to social media apps, Meta’s likely to keep users loyal — and they may spend more time on the particular platform if they find it increasingly helpful or fun. As a result, advertisers will keep spending on ads and could even boost spending if Meta’s user numbers or length of time spent on the apps increase.
On top of this, Meta might launch new products and services that incorporate AI, and these could add to revenue. The sky really could be the limit if Meta’s investments now produce compelling AI tools over time.
But, at the very least, even if the AI opportunity isn’t as enormous as predicted, Meta still is likely to deliver AI products to strengthen an already stellar social media offering — and that should drive revenue growth over time.
Today, Meta shares trade for 24 times forward earnings estimates, a bargain basement price for this top stock with a proven earnings growth track record and potential to become a leader in the revolutionary technology of AI. And that makes the stock a once-in-a-generation investment opportunity right now, in the early days of the AI growth story.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
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