AI is at the heart of nearly everything the social media and metaverse giant is doing.
You don't have to have your head in the cloud when it comes to investing in artificial intelligence (AI). Sure, cloud service providers like Google parent Alphabet, Amazon, and Microsoftcould deliver strong growth. So can these companies' go-to provider of AI chips -- Nvidia.
But if you want to profit from the AI boom, there's another stock to consider: Meta Platforms (META -1.93%). The company's recent second-quarter update underscored why Meta is poised to be a huge AI winner.
How AI is already making Meta money
With Meta, AI isn't a technology that investors hope might pay off sometime down the road. The company is already making a lot of money thanks to AI.
Meta CEO Mark Zuckerberg mentioned in the company's Q2 earnings call that "advances in AI continue to improve the quality of recommendations and drive engagement" in its Facebook and Instagram social media apps. This showed up in Meta's Q2 results, with revenue jumping 22% year over year to nearly $39.1 billion.
The company is increasing the monetization of its apps through AI, as well. Zuckerberg said that AI is helping improve ad delivery. These efforts are bearing fruit, with ad impressions delivered across Meta's family of apps rising 10% year over year in Q2.
Zuckerberg also highlighted the smartglasses developed in partnership with EssilorLuxottica. He said, "Ray-Ban Meta glasses continue to be a bigger hit sooner than we expected -- thanks in part to AI." Zuckerberg added that demand for the smartglasses continues to outstrip supply.
What's ahead for Meta's AI efforts
Meta's AI future should be even brighter than its present. Zuckerberg revealed that the company plans to use AI to enable advertisers to provide "a business objective and a budget" -- and AI will create personalized ads to get the biggest bang for the buck.
In Q2, Meta began a major rollout of its Meta AI assistant. Zuckerberg said it's on track to become the most heavily used AI assistant in the world by the end of 2024. He thinks Meta AI will drive increased engagement in the company's products over the near term.
Meta also recently launched AI Studio, a tool that enables users to create AI agents that interact with any of the company's apps. Zuckerberg predicts that users will use it to create AI agents that create content, answer questions, and more.
Another big opportunity for Meta is with business AI agents. The company is already in early testing with these agents with positive initial feedback from customers. Zuckerberg thinks that in the future, every business will have an AI agent to interact with customers. He added, "When this is working at scale, I think that this is going to dramatically accelerate our business messaging revenue."
Meta's metaverse development efforts should also be helped tremendously by AI advances. The company plans to provide what Zuckerberg said will be "exciting updates around all of our AI and metaverse work" at its Connect conference in September.
The price is right
Unsurprisingly, Meta's shares soared after its Q2 update. The stock is up more than 40% year to date after nearly tripling in 2023.
Even with these huge gains, though, Meta remains attractively valued. Its price-to-earnings-to-growth (PEG) ratio, which factors in growth projections over the next five years, is 1.12. That's lower than any of the other so-called "Magnificent Seven" stocks.
Investors have multiple good ways to make money as AI adoption increases over the next decade and beyond. I think Meta is one of the best.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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