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The Rise of Meta Platforms: A Hidden Gem Amongst Tech Giants

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Last year, the spotlight shone on the โ€œMagnificent Seven,โ€ tech titans propelling the S&P 500 to new heights. Amid recent stumbles, attention has pivoted to the โ€œFab Fourโ€ โ€“ those stalwart members of the Seven still surging: Nvidia, Meta Platforms (NASDAQ: META), Amazon, and Microsoft.

While Nvidia boasts an impressive 80% climb this year, a superior steal lurks within the ranks of the Fab Four. Offering a robust earnings history, formidable market positioning, and exposure to the red-hot AI sector, this underdog presents a compelling case for long-term growth. So long, Nvidia โ€“ the top pick from the Fab Four is the one to seize right now.

An investor captured at work with a cup of coffee in front of a laptop.

Image source: Getty Images.

The Power of 3.1 Billion Daily Users

Iโ€™m referring to Meta Platforms, a household name due to its suite of beloved social media platforms like Facebook, Messenger, Instagram, and WhatsApp. With over 3.1 billion daily users across its apps, Meta creates a magnet for advertisers seeking to engage this vast audience.

Notably, advertising constitutes over 95% of Metaโ€™s $134 billion revenue, a stronghold the company is poised to maintain. The inherent challenge of transitioning contacts to a new platform cements user loyalty; Metaโ€™s ongoing enhancements ensure a dynamic, entertaining, and utilitarian social media experience, reinforcing this fidelity.

This brings us to Metaโ€™s AI investments โ€“ a key focus for the year. Meta AI, an advanced virtual assistant, has found a home across Metaโ€™s platforms but does not halt there. CEO Mark Zuckerberg envisions an AI-integrated Meta ecosystem to enhance user experiences, from leisure activities to business endeavors.

Consequently, Meta is deploying increased computational muscle, adding 600,000 GPUs by year-end. GPUs, pivotal in AI frameworks, drive the development and execution of complex tasks, such as large language models (LLMs).

A Standard-Bearer in the Making

Metaโ€™s proprietary LLM, Llama, powers Meta AI and other AI ventures within the company, now evolving into the Llama 3 iteration. Embracing an open-source ethos, Meta solicits invaluable feedback for technology refinement and broad user adoption, positioning itself as an industry benchmark.

Foreseeing continued social media dominance and emergent AI leadership, Metaโ€™s financial robustness supports its technological ambitions. Recent strides towards efficiency culminated in Metaโ€™s inaugural dividend declaration, reflecting the companyโ€™s conviction in funding growth while rewarding shareholders.

How much to snag a slice of this success story? Meta stands at a modest 24x forward earnings estimates, emerging as the Fab Fourโ€™s budget-friendly beacon.

Nvidiaโ€™s growth trajectory is undeniable, but Meta presents a compelling alternative. With a lower valuation and a promising AI narrative alongside a lucrative social media business, nowโ€™s the time to ditch Nvidia and embrace this Fab Four gem.

Should you bet $1,000 on Meta Platforms today?

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Randi Zuckerberg, formerly associated with Facebook and the sister of Meta Platforms CEO Mark Zuckerberg, serves on The Motley Foolโ€™s board of directors. John Mackey, former CEO of Amazonโ€™s Whole Foods Market subsidiary, is also a board member at The Motley Fool. Adria Cimino holds positions in Amazon. The Motley Fool has stakes in and recommends Amazon, Meta Platforms, Microsoft, and Nvidia, alongside recommending options trading involving Microsoft. The Motley Fool adheres to stringent disclosure practices.

Opinions expressed here are those of the author alone and do not necessarily reflect Nasdaq, Inc.โ€™s views or opinions.

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