Meta Platforms (META -0.15%) is one of my top picks for investors seeking exposure to artificial intelligence (AI) without chasing speculation. The company already embeds AI in safety, ads, and even the user experience across Facebook, Instagram, WhatsApp, and Messenger. But there's another Meta app that has largely gone under the radar (for now) -- and it's a pureplay in the AI space: the standalone Meta AI app.
This new app, combined with the tech company's ability to integrate it into its wide-reaching social networks and monetize it with ads, may prove to be a valuable goldmine for investors over time.
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A great investment, even without a Meta AI catalyst
Unlike some more speculative AI stocks, one of the great things about choosing Meta as a way to get exposure to AI in your portfolio is that it's a great business, even if some of its more speculative bets on AI don't convert into meaningful new streams of revenue. That's because the company's advertising business, which targets users across its various social networks, is already firing on all cylinders.
Second-quarter revenue rose 22% to $47.5 billion, and earnings per share (EPS) jumped 38% to $7.14. Engagement and monetization both showed significant improvement. When it comes to monetization, ad impressions increased 11% year over year and average price per ad rose 9%. Regarding engagement, Meta's daily active users across its platforms reached 3.48 billion, up 6%.
Of course, this core business is already benefiting from AI.
"On advertising, the strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ads system," explained Meta CEO Mark Zuckerberg in the company's second-quarter earnings call.
One specific way AI helped was with further expansion of the company's new AI-powered recommendation model for the ads it surfaces for users. "It's driven roughly 5% more ad conversions on Instagram and 3% on Facebook," Zuckerberg explained.
Furthermore, massive cash generation supports heavy AI investment. Meta produced more than $8.5 billion of free cash flow in Q2 (this is the cash left over after both regular business expenses and capital expenditures are accounted for), finishing the quarter with over $47 billion in cash, cash equivalents, and marketable securities. This is an impressive figure, considering the company spent $17 billion in capital expenditures during the quarter, making investments in servers, data centers, and network infrastructure, which will bolster its efforts in AI. Management was also able to return capital to shareholders along the way, repurchasing about $9.8 billion of its shares and paying out $1.33 billion in dividends during the quarter.
That mix of reinvestment and returns is exactly what long-term investors should want.
The overlooked edge: distribution and ads
Meta's AI spending is large because the goal is large. Management now expects 2025 capital expenditures of $66 to $72 billion and signaled similarly significant dollar growth for 2026 as infrastructure scales for AI workloads. As Mark Zuckerberg put it in the company's second-quarter earnings release, he's "excited to build personal superintelligence for everyone in the world." The vision is ambitious, but it fits Meta's playbook: build the compute backbone, improve the product to reach a global audience, and let the ad engine harvest value over time.
A key new factor in the company's AI strategy is the launch of the stand-alone Meta AI app on iOS and Android -- a dedicated entry point for Meta's assistant that is available across its social networking apps. The app is off to an extraordinary start.
"[Meta AI's] reach is already quite impressive with more than a billion monthly actives," Zuckerberg explained in the company's earnings call. "Our focus is now deepening the experience and making Meta AI the leading personal AI."
If generative AI assistants become daily use utilities, Meta can leverage the same monetization model it has honed for a decade and a half. And on the monetization front, it has advantages over competition because it's an expert at creating experiences that are free for users but are high-margin ad-funded revenue streams for the company.
Why Meta stock is a buy
Despite the stock's big run-up this year, it's arguably not too late to get in on this stock. As of this writing, Meta currently trades around 28 times earnings -- certainly not a cheap valuation, but not bad for a company with low-20s revenue growth, expanding margins, and significant cash flow. Many "AI plays" ask investors to pay far more for far less proof. Meta gives you AI upside with a profitable, cash-rich engine underneath -- and now a stand-alone AI app that could become a high-engagement platform, ready for a lucrative, ads-ready monetization path.
There are risks, of course. The company's performance is tied heavily to advertising. This means that a downturn in the economy could have a materially adverse impact on the company's sales and ultimately its cash flows. But with the stock's price-to-earnings ratio in the twenties despite Meta's rapid revenue growth and its big opportunities ahead, this risk seems largely priced in. Therefore, for investors seeking AI exposure backed by real earnings power, massive distribution, and a proven ad model, Meta is a no-brainer choice right now.
