Recent advances in artificial intelligence (AI) hold the potential to unlock billions of dollars in value for businesses through more effective and efficient work assisted by AI. Some of the biggest early winners in AI are the companies that make it possible to develop and train large language models, the core technology behind generative AI. But longer-term winners could be the companies that are best able to use AI to improve their businesses while helping other businesses improve their own operations.
Meta Platforms (META 1.64%) is one of those potential long-term winners. In fact, it could be sitting on a $100 billion opportunity, according to William Blair analyst Ralph Schackart. He sees Meta acting as a key facilitator for businesses looking to use AI to interact with more customers. Here's how it could send shares soaring roughly 67% over the next few years.
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The big opportunity for artificial intelligence at Meta
Meta has been working on tools to help businesses create their own AI chatbots for a couple of years now. It launched an alpha test in September 2023, and it expanded it to thousands of additional businesses a few months ago. Schackart sees the big opportunity coming as Meta expands the service to all businesses on its platform.
Meta's AI tools allow businesses to create and train their own AI chatbots, which can provide customer support and facilitate sales. With over 200 million businesses on its apps, Meta has a massive addressable market to sell its AI tools. Schackart thinks many businesses will pay Meta directly for the opportunity to offload WhatsApp conversations to AI.
He thinks strong adoption among businesses will lead WhatsApp users to engage in an average of 1.6 conversations with business AI chatbots per day by 2030. At an average cost of $0.04 each, that's a $45 billion revenue opportunity for Meta. He thinks if Meta held an auction for chatbot conversation pricing, it could fetch more than $100 billion from businesses.
NASDAQ: META
Key Data Points
Meta has had limited success charging businesses for advanced features in the past. Its WhatsApp Business Platform, accounted for in Meta's "other revenue" line item, generates a small amount of revenue compared to its ad platform. As such, it might make more sense for Meta to monetize AI chatbots with its advertising products. Specifically, click-to-message ads on Facebook and Instagram.
Using advertising to unlock the value of AI chatbots may enable Meta to scale the feature to more businesses, ultimately leading to better long-term results. AI-powered chatbots could allow businesses to process more conversations with potential customers and close more sales with lower overhead. As a result, the value of click-to-message advertising should increase as more businesses adopt and improve the technology. This is a natural way to introduce auction pricing to monetize AI chatbot conversations, even if businesses aren't paying for AI directly.
Ultimately, Meta may settle on a hybrid approach. Currently, WhatsApp for Business includes free messages for conversations started via a click-to-message ad for the first 72 hours. Paying a slightly higher price for messages sent via AI chatbot after 72 hours will likely be worth it for most businesses since they won't be paying a human agent to interact with customers.
What it all means for investors
Meta is already a massive company. It generated an estimated $163 billion in 2024, and analysts expect it to grow sales to $186 billion this year. Still, an extra $100 billion in sales by 2030 would be a huge addition to Meta's top line.
It's worth noting that Meta is spending quite a bit to improve its artificial intelligence capabilities. Meta's capital expenditures will come in between $38 billion and $40 billion for 2024, and management said it expects significant growth in capital expenditures in 2025. Those upfront cash outlays will start showing up as depreciation expense on Meta's income statement over time, which could weigh on earnings if Meta doesn't continue to grow its top line.
It's also important to note that running AI applications is relatively expensive, especially at the scale of 3 billion monthly users. Part of Meta's investments over the next few years will likely go toward bringing AI inference costs down significantly. That should make giving away AI chatbots much more profitable over time.
If the opportunity turns out to be as big as Schackart estimates, $100 billion by 2030, those costs will be well worth it. Meta should see strong profit margin expansion at that scale, even with the additional costs of developing and deploying AI. If Meta maintains its current price-to-sales multiple, adding $100 billion in revenue should send shares about 67% higher.
But keep in mind, business chatbots are far from the only revenue opportunity at Meta. It wouldn't be a surprise for shares to soar even more than 67% before 2030.
