Investing in AI: Why Meta Platforms is Worth Your Attention for the Future

The world of artificial intelligence (AI) is not just a passing trend on Wall Street. While some excitement may fade, the technology has the potential to make businesses more efficient and boost profits over time. Therefore, investing in strong AI companies remains a prudent strategy. One stock that stands out as a promising investment for 2025 and beyond is Meta Platforms (NASDAQ: META).

How Meta Platforms is Leveraging AI

Various companies are either offering AI-related services or using AI to enhance their operations. Meta Platforms does both. Its Meta AI platform, currently in competition with ChatGPT, provides a range of capabilities from simple search queries to advanced image generation, at no cost to users who already have Facebook or Instagram accounts. Moreover, Meta has introduced several versions of its open-source large language model, Llama.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Although these services are currently free, Meta Platforms does plan to generate revenue from them in the future. The company utilizes AI to enhance engagement on Facebook and Instagram through personalized recommendation algorithms. Additionally, it aids businesses in creating advertising content with AI-driven tools. The results? They are promising. Meta AI had over 500 million monthly active users as of the third quarter, and AI-enhanced video-feed recommendations have increased user engagement on Facebook by 8% and Instagram by 6%. Businesses that use Meta’s advertising solutions have seen a 7% rise in conversion rates. This progress is translating into financial success for Meta Platforms, which reported a 19% increase in revenue year over year, totaling $40.6 billion in Q3.

The company also announced earnings per share of $6.03, a remarkable 37% rise compared to the previous year. Meta ended the quarter with 3.29 billion daily active users (DAUs). Though the growth in DAUs may not be directly linked to AI, increased engagement due to AI initiatives does influence revenue positively.

What Lies Ahead for Meta Platforms

AI is likely to be a key factor in Meta Platforms’ future, especially as the company seeks new ways to monetize various AI-driven services. The journey of monetizing platforms like WhatsApp, acquired in 2014, has been gradual. Meta is beginning to implement paid messaging on WhatsApp, but this currently accounts for a small fraction of its overall revenue. The important takeaway is that Meta Platforms has a vast ecosystem with numerous expansion opportunities.

At present, the company generates substantial income from its advertising business, although this could evolve over time. Whether through AI enhancements, developments in WhatsApp, e-commerce ventures, or its aspirations for the metaverse, Meta Platforms presents diverse avenues for future monetization.

Here are two additional reasons to consider investing in Meta Platforms.

Firstly, the company boasts a significant competitive edge, primarily driven by the network effect. As more users join platforms like Instagram and Facebook, these services become increasingly beneficial for individuals and businesses alike. This dynamic positions Meta’s ecosystem as unparalleled in the social media sector, ensuring the company’s leadership in the coming years.

Secondly, Meta Platforms is now a dividend-paying entity. While it’s not yet a standout dividend stock, it has the potential to become one in the next decade. Reinvesting the company’s dividends could further enhance expected returns over time.

Don’t Miss This Opportunity Possibilities

Have you ever felt you missed out on investing in successful stocks? If so, this could be your chance.

Occasionally, our team of analysts recommends a “Double Down” stock, indicating they anticipate significant growth. If you’re anxious about missing your opportunity to invest, acting now may be wise. The numbers back this up:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $349,279!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $48,196!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $490,243!*

We are currently issuing “Double Down” alerts for three exceptional companies, and this opportunity might not come again soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 23, 2024

Randi Zuckerberg, a former director of market development at Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Prosper Junior Bakiny has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.