Forget Nvidia: Buy This Magnificent Artificial Intelligence (AI) Stock ...
When it comes to artificial intelligence (AI) investments, many investors immediately think of Nvidia. However, there is another stock that offers a great balance of growth and value, and that is Meta Platforms.
Why Meta Platforms?
Meta Platforms, formerly known as Facebook, is a premier company that operates popular social media platforms like Facebook, Instagram, Threads, WhatsApp, and Messenger. While Meta makes most of its revenue from advertising on these platforms, it is also heavily invested in AI technology.
One of the highlights of Meta's AI efforts is its generative AI model, Llama. Currently in its 3.1 version, Meta is already working on Llama 4, which is expected to be ten times more powerful than its predecessor. This advanced AI technology allows Meta to enhance its advertising strategies, making ads more targeted and personalized for users.
In addition to its AI endeavors, Meta also has a division called Reality Labs, which focuses on developing innovative products like the Meta Quest virtual reality headset and smart glasses in collaboration with Ray-Ban. While Reality Labs is currently burning through cash, Meta's strong advertising revenue stream offsets these expenses.
Investment Potential
Despite the heavy investments in AI and innovative products, Meta Platforms still maintains a healthy operating profit margin. In fact, in the second quarter, Meta saw a 38% operating profit and a 22% revenue growth, leading to a 73% increase in earnings per share.
Comparing Meta Platforms to other tech giants like Apple and Microsoft, Meta's forward earnings multiple of 25 makes it a more attractive investment option. This is significantly lower than Nvidia's forward earnings multiple of 42, indicating that Meta is undervalued in the market.
With Meta Platforms, investors have the opportunity to invest in a cutting-edge AI company at a reasonable price. Considering its strong financial performance and growth potential, Meta should definitely be on every investor's radar when looking at AI companies.
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