Investing in Artificial Intelligence
One standout amidst the “Magnificent Seven” cohort, Meta Platforms, holds a special allure for investors seeking a slice of the tech pie. The company’s unwavering commitment to artificial intelligence (AI) stands as a testament to its forward-thinking strategy. By integrating AI across all services, Meta is positioning itself as a pioneer in the tech landscape. Ventures like Meta AI, with its conversational assistant, demonstrate the company’s dedication to innovation. By fostering an open-source software infrastructure, Meta invites collaboration and feedback, a recipe for industry dominance.
As Meta gears up to deploy 600,000 GPUs by year-end to power its AI ambitions, the investment in AI is poised to pay dividends. With AI slated as the primary investment area for 2024, Meta is laying the groundwork for sustained growth and evolution.
Fortifying a Profitable Moat
Bolstered by the revenue generated from its array of social media apps – Facebook, Messenger, WhatsApp, and Instagram – Meta Platforms is building a fortress around its profit margins. The widespread adoption of its apps, attracting over 3.1 billion users daily, ensures a steady revenue stream. Advertisers flock to Meta’s platforms given the vast reach and user engagement, further solidifying the company’s competitive advantage.
Spanning generations and purposes, from leisure to professional use, Meta’s apps cater to a diverse audience. The company’s foray into AI is set to enhance user experience, potentially driving up engagement levels. This, in turn, attracts advertisers keen on capitalizing on the burgeoning user base, underscoring Meta’s appeal to investors.
An Attractive Valuation
Despite its meteoric rise, Meta Platforms offers investors an enticing proposition. With an earnings trajectory on an upswing, driven by robust ad revenues, the company is poised for sustained growth. Analysts foresee a double-digit growth rate over the next five years, underpinned by a consistent upward revenue trend.
Trading at 24x forward earnings estimates, Meta’s valuation appears modest, presenting a ripe entry point for investors seeking exposure to a tech giant with immense potential. As the company’s AI initiatives gain traction, the horizon appears promising for Meta Platforms, signaling a compelling opportunity for investors keen on long-term growth.
With a slew of positive indicators in its favor, Meta Platforms emerges as a standout candidate among the Magnificent Seven stocks. Despite recent gains, the stock’s trajectory suggests ample room for growth, making it a compelling choice for investors eyeing resilient tech stocks amidst a bullish market sentiment.
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Randi Zuckerberg, with a professional history at Facebook and sibling of Meta Platforms CEO Mark Zuckerberg, offers her insights as a member of The Motley Fool’s board of directors. Adria Cimino maintains no positions in the stocks referenced. The Motley Fool holds positions in and recommends Meta Platforms, sporting a disclosure policy for transparency.
The views and opinions articulated herein represent the author’s perspective and do not necessarily mirror those of Nasdaq, Inc.
