Unyielding AI Share to Acquire Prior to Its Ascent in 2025
Looking for hot investment trends, stock buyers often turn their eyes towards artificial intelligence (AI). For the past couple of years, AI has been the go-to sector, with Meta Platforms (META -1.62%) standing out as an unstoppable AI-adjacent company in the digital advertising industry.
Metal is setting itself apart from competitors by making its AI platform free to use and build on. This competitive edge could prove to be a massive long-term win. I believe this shift in strategy could give Meta's stock the boost it needs to soar.
What's Meta Up to with AI?
Although Meta has substantial investments in AI, augmented reality (AR), and virtual reality (VR), it primarily operates in the digital advertising space. In Q3, Meta generated a whopping $40.6 billion in revenue, with $39.9 billion coming from the advertising sector. Though Meta aims to diversify its revenue streams by dominating the AR and VR market, other investments like AI help optimize advertising profits.
Offering its AI platform for free attracts users and brings valuable training data that improves Meta's AI model's understanding of users. With that data, Meta can create targeted ads specifically for the user, increasing ad efficiency.
In addition to enhancing its advertising platform, Meta is amping up its AI for its Orion AR glasses. Even though these smart glasses are too expensive for the average consumer, they could revolutionize AI integration within society by providing contextualized AI assistants that see what we see.
While AI hasn't been a significant revenue driver for Meta, research and development are crucial for ensuring Meta's products remain at the cutting edge of technology.
Meta's 2025 Prospects
Meta had a stellar 2024, with impressive revenue and earnings-per-share (EPS) growth. In Q3, revenue saw a 19% increase, and EPS grew by 37%. Wall Street analysts predict Meta will continue this trend in 2025, with 15% revenue growth and 12% EPS growth. Expanding AI spending forms part of Meta's 2025 plans, though EPS growth is lower due to these investments.
Despite its strong performances, Meta stock still retains an attractive price point. Trading at 24 times forward earnings, Meta is more affordable than its big tech peers while still exhibiting faster growth. With its below-average valuation and promising growth prospects, Meta looks primed for another successful year in 2025.
Meta has a history of producing market-beating returns, solidifying its position as a long-term investment. Confident in Meta's future, I believe the stock is well-equipped to outperform the market over the next five years.
References for Enrichment Data:1. DeepMind – Introducing AlphaStar2. Meta Platforms Announces Q3 2021 Results3. Meta's Ray-Ban smart glasses4. Meta's Q1-2022 Financial Results5. Meta's New AI Chatbot
Investors considering diversifying their finance portfolio might consider Meta, as its continued investments in AI and other technologies are expected to drive future growth. Given Meta's commitment to making its AI platform free to use and build on, investing in its stock could potentially yield high returns in the long term.
