Nvidia has been at the forefront of the artificial intelligence (AI) revolution thanks to its powerful graphics processing units (GPUs), which have allowed companies and governments around the globe to train and deploy AI models and applications.
The semiconductor giant literally kicked off the AI craze with its A100 GPUs, which were used to train ChatGPT. Since then, multiple AI models from several companies have been trained and brought into production with Nvidia's chips. In fact, Nvidia continues to dominate the AI chip market even now, establishing a big lead over its rivals.
Nvidia's AI-fueled growth has powered a massive surge in its stock price in the past three years. The stock remains a solid bet even after its phenomenal run thanks to the huge addressable market it is serving. However, there is another company that has the potential to dominate its industry -- just like Nvidia does -- thanks to AI.
Let's take a closer look at that name and see why it could turn out to be a solid addition to your portfolio.
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This tech giant's AI tools are driving solid gains for customers
Nvidia has left little room for other chipmakers to make a dent in the AI chip market. So, investors looking for another company with the ability to become a leading player in its market and deliver healthy stock price upside in the long run should consider Meta Platforms (META 3.91%) for their portfolios.
NASDAQ: META
Key Data Points
That's because Meta is using AI to corner a bigger share of the lucrative digital advertising market. The social media giant has been able to substantially increase advertisers' returns on ad dollars spent with the help of its AI tools. Last month, Meta pointed out that its AI-focused advertising tools are driving a 22% improvement in returns on ad spending for advertisers.
Every dollar spent by advertisers in the U.S. on the company's AI ad tools is generating an impressive return of $4.52. Not surprisingly, Meta plans to enable advertisers to fully create and optimize ad campaigns with AI by the end of 2026. Such a move means that brands and advertisers won't have to go through agencies to purchase ad inventories and plan their campaigns, as all of this would be handled by AI.
As a result, it won't be surprising to see smaller brands and companies that lack the budgets to hire marketing agencies flocking to use Meta's AI tools to reach their audience. Even bigger brands could directly go to Meta to further enhance their returns on ad dollars spent. All this could pave the way for stronger growth in Meta's revenue and earnings.
The company's top line increased by 16% in the first quarter of 2025, while its adjusted earnings increased at a better pace of 37%. The stronger bottom-line growth can be attributed to a 10% increase in the average price per ad delivered by Meta last quarter. Ad impressions also increased by 5% year over year, indicating that there was an increase in the number of times users viewed ads on its platform.
A big reason why Meta can keep attracting more advertising dollars is because of its massive daily active user base of 3.43 billion across its various apps. With AI helping brands and advertisers improve audience targeting, there is a good chance that it may be able to clock strong growth in the average price per ad and the number of ad impressions it delivers in the future.
This could eventually help Meta Platforms to continue growing at a faster pace than the digital ad market and its peers. According to eMarketer, global digital ad revenue increased by 12% last year and is forecast to jump another 10% this year. Meta's 2024 revenue increased by 22%, and its performance in the first quarter of 2025 suggests that it is on track to outgrow the industry once again.
So, it is evident that AI is helping Meta Platforms become a bigger player in the digital ad market, and management is confident that this could lead to remarkable growth in the long run.
AI could send Meta Platforms' revenue soaring in the long run
Meta is expected to finish 2025 with $187 billion in revenue, according to consensus estimates. AI is expected to contribute $2 billion to $3 billion of that revenue this year, according to the company's internal estimates. But by 2035, Meta sees its AI revenue ranging anywhere between $460 billion and a whopping $1.4 trillion.
While that's a very wide range and an ambitious target, especially at the high end, investors would do well to note that the overall digital ad market is expected to exceed $1.5 trillion in revenue by 2035, according to third-party estimates. So, there is a good chance that Meta could indeed capture a huge share of this lucrative end-market opportunity on offer considering that it has been gaining ground in the digital ad space.
So, investors looking for an AI stock that has the potential to generate Nvidia-like returns in the long run would do well to buy Meta Platforms right away as it is trading at an attractive 27 times earnings, a discount to the tech-laden Nasdaq-100 index's earnings multiple of 30.
