The AI revolution has transformed our world at an unprecedented pace. Artificial Intelligence, with its ability to analyze vast amounts of data and make intelligent decisions, has revolutionized almost every industry.
There will be winners and losers as companies navigate this new era of rapid change. This article will explore two companies well-positioned to harness AI's power to reach new heights.
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Alphabet
While most investors are looking for the next up-and-coming AI company, they'll probably find it easier to search for well-established companies primed to benefit from the AI race. Alphabet (GOOGL 1.32%) is an obvious choice.
AI might have become popular lately, but it has always been an essential tool within Alphabet. Some of the most fundamental products, such as Google Search and Google ads, have utilized AI over the years to enhance user experiences and improve monetization. For example, Google uses machine learning to improve ad relevance, increasing click-through rates. The result is better advertising outcomes, better user experience, and higher revenue for Alphabet.
Another notable area where AI will have an impact will be Alphabet's cloud computing business. By incorporating AI into its cloud computing products, the tech company helps enterprises leverage the latest AI technology to enhance their operations. For example, companies can leverage Google's AI Platform to build and train machine learning models. And with the proliferation of new AI technologies in the future, Alphabet is set to introduce even more AI-enabled cloud computing services, opening up new income streams.
And let's not forget Alphabet's moonshot bets, venture-capital type investments that could help solve massive humanity problems. Waymo and Verily Life Sciences are two examples of these projects that have significantly leveraged AI to solve complex problems. These investments could eventually open up new growth opportunities for the company.
In short, Alphabet's strategic focus on AI and machine learning positions the company for success. It improves core offerings, opens new income streams, and revolutionizes industries via its moonshot bets. It's a stock worth watching in the next few years.
Meta Platforms
Like Alphabet, Meta Platforms (META -0.59%) is strategically positioned to leverage AI to enhance its existing business and explore new opportunities.
To begin with, AI should help Meta do more with less, which is crucial as the company navigates its current headwind of multi-year low growth in its advertising business -- revenue fell 1% in 2022, a massive decline from 37% growth in 2021. For example, Meta can leverage AI to automate its workflows to reduce its reliance on human resources. In many ways, its recent layoffs of up to 22,000 jobs (11,000 in 2022, with the remainder to come in 2023) would likely be tough to execute had it not replaced part of the jobs with AI.
AI should also help Meta improve its user experience, which in turn improves its advertising income. For example, the tech company can continuously employ advanced AI to enhance its personalized content feeds and recommendation systems. With better content recommendations, the company can improve user engagement and encourage users to return for more content. A loyal user base is crucial, as it keeps Meta's advertising engine going (and growing).
And speaking of advertising, AI can also help advertisers become more successful. For example, AI can help analyze massive amounts of data, identify trends, and offer recommendations to help advertisers improve their advertising campaigns. And more recently Meta introduced AI Sandbox -- a set of AI tools that include generative AI -- to help advertisers do more with less. The idea is simple: The more successful advertisers are, the more likely they will sustain and increase their advertising budget on Meta's platforms -- including Facebook, WhatsApp, Instagram, and Facebook Messenger.
AI is also an essential enabler to the metaverse, an area in which Meta is betting heavily. The technology should improve the user experience, creating a more realistic and immersive experience on hardware like AR and VR. Besides, AI technology could help reduce Meta's cash burn by leveraging tools like generative AI to minimize the need for human resources in areas like marketing, software development, etc.
Long story short, Meta is an important player to watch as the AI trend unfolds in the coming years.
