Meta Platforms (NASDAQ:META) is one of the major players in this artificial intelligence (AI) revolution. Though the company’s biggest source of income is advertising through its social media platforms, it has big AI dreams. Meta has spent billions of dollars on the build-out of its own data centers and just recently took a significant step toward the monetization of its investments — the launch of its Muse personal AI agent and its Muse Wonder and Muse Wonder Full advanced models.
So, investors looking for AI stocks to buy may turn to Meta, and that’s what they did from the start of this year through early September. But in recent times, that momentum has stalled, to be replaced by caution. The stock has slipped 17% from a peak last month amid general concerns among investors about spending on AI infrastructure. Some investors worry that an AI bubble has formed, and that any slowdown in the AI space could significantly hurt the biggest spenders.
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Meanwhile, Meta’s earnings continue to march higher, thanks to advertising growth and its solid social media business.
Considering the full picture, is Meta stock a buy on the dip? Let’s find out.
Image source: The Motley Fool.
More than 3 billion people use Meta apps daily
As I mentioned, when you think of Meta, you may think: Facebook, Messenger, WhatsApp, and Instagram. Those are the social media apps the company owns, and about 3.6 billion people worldwide use at least one of those daily. And this has built advertising strength for Meta. Advertisers, seeing how much time we all spend on Meta’s apps, rush there to reach us.
This has resulted in earnings growth over time for Meta, and the company’s investment in AI could seriously reinforce this revenue stream. That’s because Meta’s AI is making its social media apps more interesting, which will keep us on them longer, and AI is improving the advertising experience and results. All of this should please advertisers and progressively prompt them to increase their spending here.
Meanwhile, Meta’s launch of the Muse AI agent and its advanced models represent additional sources of revenue. The personal AI agent is free to a certain extent, but those with greater usage needs may pay for a subscription. So far, the free app has proven to be popular, reaching 5 million downloads more quickly than ChatGPT and Claude after their launches.
