Meta Platforms (META +0.79%) has billions of active users across all of its platforms. Between WhatsApp, Facebook, Instagram, and Messenger, it has a huge user base that it can test new products and services on. Its Threads platform grew to over 100 million users in less than five days after launching last year, largely due to it being incredibly easy for Instagram users to try it out.
The company looks to be leveraging its users once again to help it jump on the next big bandwagon: artificial intelligence (AI). CEO Mark Zuckerberg sees it as a huge opportunity, and while Meta may be a bit late to the game, it has some ambitious targets ahead. And if it achieves them, that could make an already hot stock even better.
NASDAQ: META
Key Data Points
Will Meta's AI become bigger than ChatGPT?
Artificial intelligence chatbot ChatGPT has been publicly available since November 2022 and it has ignited a lot of excitement around AI and how it can transform how people do tasks and potentially even eliminate the need for certain jobs. There are reportedly 200 million monthly active users on ChatGPT. But Zuckerberg thinks Meta's AI can surpass that -- before the end of the year.
Meta recently released a new AI model, Llama 3.1, which it says performs better than the latest GPT-4o and Claude 3.5 Sonnet on multiple benchmarks. The model is open-source -- meaning anyone can see and update the code -- which could attract many developers and potentially help make the model better over time. The AI will be integrated within the company's applications and even virtual reality headsets, making it easy for Meta's vast user base to gain exposure to it and potentially become regular users.
Given the billions of users Meta's applications have, surpassing ChatGPT in number of users may not be all that difficult, even if the goal is for that to happen before the end of the year.
Why this could be a big win for Meta
I wouldn't be surprised if Meta can get a lot of people to use its AI platform, especially if it's easily accessible within WhatsApp, Facebook, and other popular applications. The real test, however, will be how long people use it for, and whether it will lure them away from ChatGPT. While people may accidentally click a button to launch the Meta AI or just test it out to see what it does, and that will surely bump up the user count, for it to really be a significant game changer for the business, it will need to show that it's better than ChatGPT or that it can at least be a viable alternative. That could take a bit longer to prove.
If that happens and users do indeed see value in Meta's chatbot, the company could find ways to monetize the product. ChatGPT, for instance, offers a subscription service to a more advanced version of its chatbot. Microsoft's Copilot is available within its Office software for an additional subscription price as well.
Plus, if Meta's AI can enhance the user experience within its existing applications, leading to greater usage and more users overall, that could also draw in more advertising dollars.
Meta has already been growing at an impressive rate and an AI boost could generate even more bullishness around the stock. For the three-month period ending June 30, Meta's sales grew by 22% to $39 billion. And its net income rose by 73% to $13.5 billion. Not only did the average price per ad increase by 10% during the quarter, but the number of ad impressions across its family of apps also rose at a similar rate. The stock is up about 40% so far this year.
Is Meta Platforms stock a buy?
Meta's business has been doing well, but I would hold off on buying the stock until it can prove that its new AI assistant can truly be the success that Zuckerberg envisions. There are a lot of big tech companies launching their own chatbots and it may not be easy to lure users away from one onto another.
If Meta's AI does prove it can win over users, however, then it could make the tech stock a no-brainer buy as it could accelerate the company's already strong growth rate.
