Artificial intelligence (AI) has emerged as a force to reckon with in the modern economy and is transforming the lives of people across the world. Not surprisingly, AI has also become a major investment trend and has piqued the interest of seasoned and new investors.

While several companies now boast cutting-edge AI-powered technologies and solutions, it is also essential for investors to consider other aspects such as market share, competitive advantages, and scalability of the business. Companies such as Palantir (PLTR 3.73%) and Meta Platforms (META 0.43%) seem to fit the bill.

If all goes well, these companies can deliver exceptional returns and help build lasting generational wealth for patient investors. Here's why.

Palantir

Palantir Technologies, a leading data mining software and machine learning specialist, has seen a remarkable surge in its stock price in the last month. Shares are up by nearly 40% since the company released its fourth-quarter earnings report on Feb. 5.

Once known mainly for helping government agencies in thwarting terrorist plots, Palantir's commercial segment is now rising to prominence. While government business presently contributes 53% of Palantir's total revenue, the revenue mix is increasingly shifting toward the commercial segment. This transition is expected to boost Palantir's margins, since private clients allow for higher pricing flexibility and involve lower regulatory hurdles compared to government clients. Palantir's focus on developing industry-specific solutions and targeting key verticals such as government, healthcare, pharmaceutical, banking, and automotive has also enabled it to differentiate itself from the competition and build strong relationships with clients. This has ensured a sticky customer base for the company.

Palantir is also seeing solid growth in its overall customer base, thanks to the rapid adoption of the recently launched generative artificial intelligence-powered software suite called AIP (Artificial Intelligence Platform). The company has opted for an effective go-to-market strategy, centered around its Bootcamp approach, to enable existing and prospective customers to quickly grasp AIP's capabilities. This, in turn, has accelerated the sales cycle and helped successfully convert engagements into lucrative partnerships.

Considering the favorable tilt in revenue mix, entrenched customer relationships, and success of the AIP platform, Palantir can prove to be a smart long-term investment.

Meta Platforms

Meta Platforms, the owner of wildly famous social media platforms Facebook, Instagram, and WhatsApp, has undergone a remarkable turnaround, with its stock witnessing a staggering surge of nearly 450% from its low in November 2022. The company's focus on leveraging AI technologies to improve user engagement and ad targeting, and its effort to control costs have been instrumental in this resurgence.

According to Magna, digital ad spending is expected to grow by 7.2% year over year to $913 billion in 2024, driven mainly by improving economic conditions, lowering inflation, and major events such as the U.S. elections and European football. Meta stands to benefit especially from the increasing demand for digital pure-play (DPP) ad formats such as search and e-commerce advertising, social media advertising, and short-form video advertising in 2024.

Besides secular tailwinds in the digital advertising space, Meta also benefits from its exceptional customer reach. With 3.2 billion people using at least one of the social media platforms (family of apps) daily (which amounts to nearly 40% of the global population), Meta enjoys a formidable position in the digital advertising market. The company's short-form video format Reels is helping drive engagement across both Instagram and Facebook. Since reels are now reshared 3.5 billion times every day, Reels ads can also emerge as a major revenue contributor in the coming years.

Meta's AI-driven recommendations system is helping improve user engagement by suggesting more personalized content. Furthermore, the company is also helping advertisers craft targeted campaigns and measure advertising performance with its portfolio of AI- and ML-powered tools such as Advantage+, A/B Testing, and Conversions API. These AI initiatives drove up both ad impressions and average price per ad in the fourth quarter of fiscal 2023 (ending Dec. 31, 2023), translating into solid financial performance for the company.

It is undeniable that Meta's Reality Labs division remains loss-making even in 2023. Yet, its losses have been more than offset by the company's social media advertising business. Meta Platforms is currently trading at 24.8 times forward 2024 earnings. Although higher than its historical valuation, it is still lower than the valuation multiples of the remaining "Magnificent Seven" stocks except for Alphabet. Yet, excluding Nvidia, Meta's stock has performed better than all other Magnificent Seven stocks in the past year.

Hence, based on its solid fundamentals and reasonable growth-adjusted valuation, Meta Platforms seems to be an attractive big tech pick in 2024.