Meta's AI Strategy Drives Stock Rally and Positions Company as AI Leader

Is Meta the first tech company after Nvidia to profit from its investments in AI? Analysts say its 16-day stock rally is a big indicator of its success

Meta is seeing a big boost in engagement on Facebook and Instagram, with more advertisers jumping on board thanks to its AI-driven improvements. Its focused approach, especially with the open-source Llama model, is helping it shine in the crowded tech world.Meta Platforms is one of the largest beneficiaries of artificial intelligence (AI) investments this year, as per reports. Amidst the buzz around DeepSeek, a Chinese AI startup making waves for its performance despite using fewer chips and costing less, Meta's stock continued to rise, as per reports. Investors saw DeepSeek's success as a win for open-source AI models, much like the ones Meta is developing with its Llama platform. This shift towards open-source technology only reinforced Meta's strategy, bolstering confidence in its future in the AI space. Unlike most of its Big Tech competitors, which are still trying to convert their high AI expenditure into profits, Meta's stock was up 24% since the start of the year and, as of Wednesday, is riding a 17-session winning streak on Wall Street, reported Yahoo Finance. According to data compiled by Bloomberg, Facebook parent's record 16-day rally represented the longest winning streak of any current Nasdaq 100 Index component going back to 1990. The stock boom has driven its valuation towards $2 trillion for the first time. Experts are now more certain of Meta's standing in the AI competition. Conrad van Tienhoven, a portfolio manager at Riverpark Capital, said "I have long viewed Meta as the biggest beneficiary of AI outside of maybe Nvidia," as quoted by Bloomberg. While Amazon, Google, Microsoft, and Tesla are struggling to see positive traction from their AI investments, Meta's strategy appears to be working. AI is already powering user interaction, particularly on its core properties, Facebook and Instagram. CEO Mark Zuckerberg said that AI-fueled upgrades to the platforms' feed and video suggestions have led to 8% growth in time spent on Facebook and 6% on Instagram, in the third quarter. CFO Susan Li said during the fourth quarter that 4 million advertisers are using the company's generative AI tools to create ads, up from 1 million six months ago. All of that makes AI an easier sell for investors. Jim Polk, head of equity investments at Homestead Advisers, said "Meta has shown that AI is having an impact on user engagement, on margins, whereas Alphabet still needs to prove its capex is working and that its market share in search won't be eroded," as quoted by Yahoo Finance. Meta's strategy is more specific than that of its rivals. Rather than attempting to sell AI solutions to third-party customers, Meta is betting big on technologies that directly add value to its own business, as per the report. This focused effort appears to have made AI an obvious value driver for Meta, in contrast with the more general, longer-term bets its rivals are placing on AI platforms and services. The firm is also pushing forward with its open-source AI model, Llama, and aims to establish a global AI standard. Zuckerberg hinted that the next iteration, Llama 4, will be "natively multimodal," unlocking new applications that could enable it to lead the pack in AI adoption, as per the report. How is Meta's AI different from other tech companies? Meta's approach focuses on using AI to improve its own products, like ads and user engagement. This has helped Meta see quicker success compared to competitors still working on long-term AI projects. What is Meta's Llama AI? Llama is Meta's open-source AI model, designed to be a global standard for artificial intelligence. It's available to the public, helping Meta stay competitive and setting the stage for future AI breakthroughs.

Mark Zuckerberg Just Made 3 Startling AI Predictions. Should You Buy Meta Stock Before They Come True? | The Motley Fool

You may think of social media when you think of Meta Platforms (META 0.34%). After all, the company owns some of the most popular apps in the space, from Facebook and Messenger to WhatsApp and Instagram. But Meta isn't just about social media. The company has made it clear that it aims to win in the high-potential market of artificial intelligence (AI), too. Over the past few years, Meta has increased its spending in the technology and forged ahead with the development of key innovations, such as large language models (LLMs) and AI assistants. Chief Executive Officer Mark Zuckerberg recently said the tech giant would invest as much as $65 billion in AI infrastructure this year and expand its AI teams. This is after already calling AI the key investment area in 2024. On top of this, during the company's latest earnings report, Zuckerberg made three startling AI predictions. Should you get in on Meta stock before these predictions come true? First, here's a quick look at the Meta story so far. The company owns today's top social media apps -- more than 3.3 billion people worldwide use at least one of them every day. This offers Meta a pretty solid moat, or competitive advantage. If you drop WhatsApp, for example, and head over to a rival app, you may not find all your contacts on that other platform, which encourages users to stick with Meta's popular offerings. This is Meta's key to revenue. Advertisers flock to advertise across Meta's apps -- where they know they'll find consumers -- to tell them about their products and services. This translates into billions of dollars in revenue and profit for the company. Meanwhile, Meta has broadened its research and expertise into other areas such as AI, and this could benefit the social media business and offer the company the possibility of developing other revenue streams down the road. Meta already had set a goal of bringing on board 600,000 graphics processing units (GPUs), the high-powered chips for AI, last year. Most recently, the company said it aims to have 1.3 million GPUs by the end of this year. It has used this compute to train Llama, its own LLM, and now has advanced to the fourth generation. Meta has made Llama open source, so anyone can access it and contribute to its development and use. The advantage of this is that open source software often leads to the creation of an industry standard, which could establish Meta as a leader. Now let's consider Zuckerberg's three show-stopping AI predictions for the year. The first has to do with Meta AI, the company's AI assistant. Zuckerberg says he expects "a highly intelligent and personalized" AI assistant will reach 1 billion users in 2025 and predicts Meta AI will be the one. He also says that this year, Llama will become "the most advanced and widely used" LLM. The Meta CEO says Llama 4 will have agentic capabilities. This could be key to unlocking significant growth, since AI agents involve applying AI to real-world problems. Agents are able to reason out complex problems and execute solutions, something that could be transformative for users. Finally, Zuckerberg says that this year, it will be possible to build an AI engineering agent with abilities that rival that of a mid-level engineer. He calls this "potentially one of the most important innovations in history" and says the company that accomplishes it first will have a clear advantage. A few weeks ago, Meta said it planned to build an AI engineer to help with coding as it expands its AI research and development efforts. Let's get back to the question: Should you take Zuckerberg's predictions as a reason to get in on Meta stock now before these goals become a reality? It's too early to predict whether Meta will be successful across all three points, but it's fair to say the company is offering itself all of the necessary tools to get there. Meta also is financially sound, so it can afford to invest in AI and continue delivering growth to investors through gains in revenue, as well as share repurchases and dividends. Meta has said in the past that its major investments always have taken time to bear fruit, and this won't be an exception. But 2025 could be a key moment along the way and a time when investors will start to see signs of Meta's potential in this high-growth area. For starters, a widely used AI assistant may spur users to spend even more time on Meta's apps, and that could encourage advertisers to increase their spending there. All of this means that now, after Mark Zuckerberg's big predictions, it's a great time to buy Meta shares and hold on as this growth story unfolds.

Meet 1 Top AI Stock That Has Soared 675% Since 2022

Artificial intelligence (AI) continues to garner lots of attention. And for good reason. It seems that not a week goes by without a major news story about it grabbing eyeballs. The takeaway for investors is that this revolutionary technology is here to stay. Corporate executives believe this to be true, and they continue to pour billions upon billions of dollars into it. At the end of the day, it might be a good idea to figure out how to gain exposure to this trend. You don't have to look that far to find what could be a worthwhile opportunity. Meet one top AI stock that has soared 675% since early November 2022. Fundamental strength It wasn't long ago that Meta Platforms (META 0.35%) was faced with fading investor excitement. In 2022, macro headwinds led to slower revenue growth. And profitability was under pressure due to rising costs. But the digital advertising powerhouse came roaring back, reporting strong financial results over the past couple of years thanks to a resilient economy and a renewed focus on financial discipline. Revenue was up 15.7% in 2023 and 21.9% in 2024. And in the recently ended fourth quarter, Meta posted a stellar 48% operating margin, up from 20% just two years ago. This type of fundamental strength is precisely what has driven Meta shares higher in recent times. AI ambitions Like most of its peers in big tech, Meta is investing aggressively in AI, with $39 billion in capital expenditures (capex) in 2024. On the fourth-quarter earnings call, chief financial officer Susan Li said: "We expect our full year 2025 capital expenses will be in the range of $60 billion to $65 billion. We expect capex growth in 2025 will be driven by increased investment to support both our generative AI efforts and our core business." This is a massive sum of money that will go toward building out technological infrastructure. Meta has already launched AI features for its social media users, helping them find information, edit photos, and write more creatively. And it's making a hardware push, selling 1 million pairs of Ray-Ban smart glasses last year. There are also tools built solely for advertisers to create more efficient marketing campaigns. The company says more than 4 million ad customers are already using generative AI features. The AI playbook is simple. It hopes this technology not only promotes user growth, but that it can also boost engagement. And for advertisers, it's all about increasing their return on investment when running campaigns so that more ad dollars are spent with Meta. Position of power Most businesses can't even dream about spending this kind of money on AI. Meta is in this advantageous position because of its financial situation. As of Dec. 31, it had $77.8 billion of cash, cash equivalents, marketable securities on its balance sheet, significantly more than its total long-term debt of $28.8 billion. Plus, Meta generated $52.6 billion of annualized free cash flow in the fourth quarter. There is almost no financial risk for this company. It also helps that Meta has a gargantuan base of 3.35 billion daily active users across its family of apps, up 5% year over year in the fourth quarter. And it helps create powerful network effects that support the company's incredible competitive position. Is Meta worth the price? As of this writing, Meta shares trade at a price-to-earnings ratio of 29.8. This is a premium to the trailing-five-year average, which isn't a surprise considering the stock's monumental rise since 2022. To be clear, the valuation isn't a bargain by any means. However, it's still not a terrible entry point for new investors. Diluted earnings per share rose at a compound yearly rate of 20.1% over the past three years. That track record justifies paying the current price to own one of the best businesses on the planet.

Where Will Meta Platforms Stock Be in 3 Years?

Meta Platforms (META 0.35%) stock has been in fine form on the market over the past three years, delivering healthy gains of 116% to investors and outperforming the 37% increase in the Nasdaq Composite index during the same period. The tech giant's healthy gains can be attributed to its market share growth in the lucrative digital advertising space, where it is now using artificial intelligence (AI) tools to win a bigger share of customers' wallets. That's a smart thing to do right now as the adoption of AI in marketing is expected to increase at an annual rate of 25% through 2030, according to Grand View Research. However, will AI be enough to drive Meta stock higher over the next three years? Let's find out. Meta Platforms' AI-driven ad revenue has been picking up Meta Platforms released its fourth-quarter 2024 results on Jan. 29. The company ended the year with a 22% jump in revenue to $164.5 billion, while earnings increased an impressive 60% year over year to $23.86 per share. The numbers exceeded Wall Street's expectations. The good part is that Meta's AI-focused advertising tools are gaining solid traction among customers. For instance, CFO Susan Li remarked on the company's latest earnings conference call that its Advantage+ platform, which allows advertisers to automate their ad campaigns, witnessed a terrific year-over-year increase of 70% in the fourth quarter. This platform has now exceeded an annual revenue run rate of $20 billion. Meanwhile, Meta is also witnessing a significant jump in the adoption of its Advantage+ Creative platform, which optimizes the images and video using generative AI to help improve audience interaction. It is worth noting that the adoption of Meta's generative AI-powered ad creation tools has jumped fourfold in a matter of just six months. More importantly, Meta has been pushing the envelope to ensure that it can make the most of AI to help increase advertisers' returns on the ad dollars they spend. It launched a new machine learning platform called Andromeda in the second half of last year, developed in partnership with Nvidia. Meta points out that Andromeda's ability to "narrow down a pool of tens of millions of ads to the few thousand we consider showing someone" has led to an 8% increase in the quality of ads that are served to the audience. Not surprisingly, Meta has decided to spend between $60 billion and $65 billion in capital expenditure this year to support its generative AI efforts and the core business. That would be a big increase from last year's outlay of $39.2 billion. However, there have been concerns about the returns that Meta and others, which are spending such big money on AI projects, can generate from these investments. But then, it looks like the money that Meta is spending to bring AI-focused advertising tools to its customers is indeed bearing fruit. This is evident from the 14% year-over-year increase in the average price per ad that Meta charged in Q4. That's a huge improvement over the 2% growth in the average price per ad in the fourth quarter of 2023. So, the better quality of ads and the AI-powered ad creation and optimization tools are probably encouraging advertisers to spend more across Meta's family of apps, and this could lead to healthy bottom-line growth over the next three years. How much upside can investors expect over the next three years? We have already seen that Meta delivered impressive earnings growth in 2024. However, analysts are projecting a single-digit jump in its earnings this year to $25.30 per share. META EPS Estimates for Current Fiscal Year data by YCharts This slowdown in Meta's bottom-line growth this year can be attributed to the significant increase in its expenses to support its AI-centric efforts. However, we can see from the chart that Meta's earnings growth is expected to accelerate into the mid-teens from next year. Assuming the company manages to achieve $34.08 per share in earnings for 2027 and trades at 33.5 times earnings at that time (in line with the tech-laden Nasdaq-100 index's multiple), its stock price could jump to $1,141 in three years. That would be a 65% jump from current levels (at the time of this writing). Given that Meta is trading at 28 times earnings right now, a discount to the Nasdaq-100, investors are getting a good deal on this stock right now despite the impressive gains that it has clocked in the past three years. Savvy investors, therefore, can consider adding this AI stock to their portfolios because it seems built for more upside.

Meta Outperforms Magnificent 7 As 16-Day Streak Puts Bulls In Control - Meta Platforms (NASDAQ:META)

Investors remain bullish despite layoffs, as Meta doubles down on AI while maintaining strong technical bullish signals. Meta Platforms Inc META is rewriting the record books. The stock notched its 16th straight winning session on Monday, the longest streak among the Magnificent Seven. At $717.40, it's knocking on the door of its all-time high of $725.01 -- and Wall Street can't seem to get enough. Resilient to AI Jitters, Thriving on AI Growth Even as AI-driven sell-offs rattled the tech sector -- like when Chinese startup DeepSeek blindsided Nvidia Corp NVDA -- Meta held its ground. Unlike chipmakers, who live and die by AI hardware demand, Meta has AI-powered Advantage+ shopping ads, which grew 70% last quarter and hit a $20 billion annual run rate. Read Also: OpenAI's ChatGPT Surpasses Elon Musk's X To Rank Sixth Most-Visited Website Globally -- Sam Altman Says, 'Still A Long Way To Go To Run Down Google' Zuckerberg's Performance Purge Despite the stock's relentless climb, not all is smooth sailing inside Menlo Park. Meta is axing 3,000 employees this week in a performance-driven purge. CEO Mark Zuckerberg has warned that 2024 and 2025 will be "challenging years" as the company doubles down on AI and metaverse bets. Zuckerberg elaborated on comedian Joe Rogan's podcast, saying he planned to replace mid-level engineers at his company with AI systems. Wall Street doesn't seem to care. Unlike past layoffs that spooked markets, investors see this as a leaner, meaner Meta primed for efficiency and growth. Meta Stock Chart Screams 'Bullish' With Meta trading above its eight, 20, 50 and 200-day simple moving averages, the trend is undeniably bullish. Even the MACD (moving average convergence/divergence) indicator at 28.12 and RSI (relative strength index) at 80.22 suggest strong momentum -- though an RSI that high could mean it's getting overheated. What's Next? With Nvidia's earnings still on deck, the AI trade could see fresh volatility. But for now, Meta remains the only Mag 7 stock that rallied after earnings, and bulls aren't blinking. The question is: can this streak keep running, or is a breather overdue? Read Next: Amazon's AI Bet Is Big, But Will Investors Stick Around For The 'Lumps'? Image: Shutterstock METAMeta Platforms Inc$714.31-0.43%Overview Rating:Speculative50%Technicals Analysis660100Financials Analysis400100WatchlistOverviewNVDANVIDIA Corp$132.54-0.77%Market News and Data brought to you by Benzinga APIs

1 Number That Shows Why Meta Platforms Is a Screaming Buy | The Motley Fool

Meta Platforms (META 0.10%) is coming off one of the best years in its history in 2024. The stock jumped 65% as it delivered strong growth throughout the year on the top and bottom lines. Meta AI is used by more people than any other artificial intelligence assistant. It sold more than 1 million of its new Ray-Ban Meta smart glasses, and it posted growth in virtually every category and key performance indicator. For the year, Meta reported 22% revenue growth to $164.5 billion, while its operating income rose 48% to $69.4 million, giving it an operating margin of 42%. In the fourth quarter, its biggest of the year, Meta's operating margin reached 48%, meaning it kept nearly one out of every two dollars it made in revenue before paying taxes. That's a hallmark of a dominant business and one with tremendous market power. With the help of a lower tax rate, its net income jumped 59% to $62.4 billion, adding $23 billion in profit in just one year. Its performance has marked a stark turnaround from the Meta of 2022, whose stock had plunged on a misguided venture into the metaverse. Meta is still burning billions on Reality Labs, losing nearly $18 billion in the segment last year, but its success with Meta AI and the momentum in smart glasses show that at least some of those investments are paying off. One number in particular showed the strength of Meta's business last year. At one point earlier in the company's history, investors focused closely on user growth as a sign of the underlying health of the business. It has stopped reporting user data by region, but it still reports daily active users across its family of apps, which includes Facebook, Messenger, Instagram, and WhatsApp. The total daily active user base reached 3.35 billion in 2024, up 5%, meaning the company added 160 million users in one year, or roughly half of the population of the U.S. About 40% of the world's population now uses at least one Meta product. No other company has that close a relationship with that many users, and it shows why Meta now has the most used AI assistant. The growth and size of its platform is also driving the increases in its advertising business. Ad impressions were up 6% year over year, with 6% growth in North America, its most important region, and average price per ad jumped 14% in the quarter, a sign of increasing demand among advertisers for placement on Facebook and Instagram. Investors have been skeptical of Meta's user growth several times before, believing that users are flocking to alternative social media platforms like Snapchat or TikTok. But the numbers above show that Meta is still making substantial gains each quarter, strengthening its lead over the competition. The growth shows that Meta's network effects, a key source of its competitive advantage, continue to get bigger. That also reflects well on the reputation of its brands since users are likely to be drawn to the social media platforms that their friends and other members of their community are on or that they hear about through word of mouth. That, in turn, makes the platform even more valuable to advertisers. The strength and success of its advertising business reveal a simple truth about Meta Platforms: The business is relatively cheap to run compared to the revenue it generates. The social media business model relies on user-generated content to engage people and then sell highly targeted ads based on those user profiles. At a scale of more than 3 billion users, that becomes highly efficient. That's why its segment with its family of apps reported an operating margin of 60% on $47.3 billion in revenue in the fourth quarter. The stock now trades at a price-to-earnings ratio of 29.2, which is only slightly higher than the S&P 500's 27.7 even though Meta is growing much faster than the average of S&P stock With its steady user growth, surging ad revenue, highly profitable business, and affordable valuation, Meta is an excellent bet to move higher.

Why Meta Platforms Stock Jumped 18% in January | The Motley Fool

Shares of Meta Platforms (META 1.33%) were among the winners last month. The social media stock took off after the inauguration, benefiting from a potential TikTok ban, the company's increasingly cozy relationship with President Donald Trump, news of increased investment in artificial intelligence (AI), and even the DeepSeek revelation. Toward the end of the month, the stock also jumped on stellar results in its fourth-quarter earnings report. According to data from S&P Global Market Intelligence, the stock finished the month up 18%. As you can see from the chart below, the stock took off at the end of the month following the inauguration. Meta is coming off an impressive 2024 as its stock surged, its company delivered impressive quarterly results, and it finished the year with the most used AI assistant, Meta AI. Investors bet that momentum in January would continue as the tech giant seemed well positioned to benefit from a number of trends in the industry. First, while President Trump temporarily suspended the TikTok ban, the negative attention around the Chinese video-sharing app could benefit Meta, and a sale to an American owner could weaken its algorithm, favoring Meta properties like Facebook and Instagram. Stocks rose broadly following the inauguration, and investors expect Meta to benefit from a friendlier business environment under the Trump administration, which could also include tax cuts. In the last week of January, when AI stocks got hammered by the DeepSeek launch, Meta was one of the rare winners in the sector as investors seemed to believe that DeepSeek's open-source model validated Meta's own open-source approach. Additionally, Meta does not have a cloud infrastructure business and is more positioned to benefit from general advances in AI as it grows its social media ecosystem and builds its hardware business. The stock closed up 2% on Jan. 27 even as stocks like Nvidia crashed. To wrap up the month, Meta delivered a blowout earnings report, beating estimates on the top and bottom lines as earnings per share jumped 50% to $8.02. On the earnings call, CEO Mark Zuckerberg said he expected Meta AI to become the first AI assistant to have more than 1 billion users by the end of the year, and the company also has green shoots in other areas like its Ray-Ban smart glasses, of which it sold over 1 million units in 2024. Its first-quarter guidance called for revenue growth to slow to between 8% and 15%, but the business seems well positioned for another strong year as it remains at the forefront of AI and its user and advertising base continues to grow. Even after the surge in 2024 and last month, the stock continues to look like a buy.

Meta's AI Push Could Add $100 Per Share While Tesla Faces EV Headwinds: Top Analyst - Amazon.com (NASDAQ:AMZN), Salesforce (NYSE:CRM)

Meta Platforms, Inc. META is riding a 16-day win streak thanks to its aggressive AI initiatives, while Tesla Inc. TSLA struggles with EV headwinds -- yet Wedbush analyst Dan Ives remains optimistic about Elon Musk's long-term robotics and AI strategy. What Happened: On Tuesday, while appearing on a CNBC segment, Ives highlighted Meta's AI-driven monetization strategy. "It's about monetizing those three and a half billion DAUs," he said, adding that AI innovations "could be an incremental $100 per share" for Meta as the company ramps up its efforts. Tesla has faced challenges in the EV sector, he said but Ives believes its future lies beyond just cars. "It's about autonomous. It's about ultimate robotics. That's really the future. That's why we're bullish on Tesla," he stated. Meta and Tesla stock performance in the last 16 days: See Also: Elon Musk's SpaceX And T-Mobile Go Live With Starlink-Powered Satellite-To-Cell Service: Here's How Much It Will Cost Ives also addressed concerns about AI infrastructure spending and the role of China's DeepSeek. He discussed the impact of the Jevons Paradox on AI infrastructure investment, suggesting that as costs decrease, investment will rise. However, he said that the software aspect is where significant growth is expected, with companies like Palantir Technologies Inc. PLTR and Salesforce Inc. CRM poised to benefit. Why It Matters: Companies like Amazon.com Inc. AMZN, Microsoft Corp. MSFT, Meta, and Alphabet Inc. GOOG GOOGL are investing a record $320 billion in AI infrastructure this year. This is a significant increase from $246 billion in 2024. Amazon plans to invest over $100 billion, while Microsoft and Alphabet each aim for $80 billion. Meta follows with more than $60 billion for AI. Wall Street doubts Big Tech's spending spree. China's DeepSeek also shook the market with a cheap, high-performance AI model. Investors fear falling AI costs could undercut Big Tech's massive bets. Price Action: Meta's stock edged up 0.011% to $719.88 in after-hours trading after closing at $719.80 on Tuesday, gaining 0.33%. Tesla's stock dipped 0.53% to $326.75 after hours, following a 6.34% drop to $328.50 at Tuesday's close, according to Benzinga Pro. Image via Shutterstock Read Next: Elon Musk's $97.4 Billion OpenAI Takeover Bid Reportedly Not Received By ChatGPT Parent: 'Another One Of His Tactics,' Says Sam Altman Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. AMZNAmazon.com Inc$232.81-0.14%Overview Rating:Good62.5%Technicals Analysis1000100Financials Analysis400100WatchlistOverviewCRMSalesforce Inc$325.00-0.67%GOOGAlphabet Inc$187.05-0.61%GOOGLAlphabet Inc$185.25-0.65%METAMeta Platforms Inc$719.880.35%MSFTMicrosoft Corp$411.40-0.20%PLTRPalantir Technologies Inc$113.25-2.91%TSLATesla Inc$326.75-6.84%Market News and Data brought to you by Benzinga APIs

Meta May Finally Have a Product Hit. Is It a Game-Changer For the Stock? | The Motley Fool

Meta Platforms (META 0.10%) is one of the most successful and valuable companies in the world, but it may be known as much for its flops, as well as its wins. Meta's big bet on the metaverse hasn't gone well, and the company seems to have wasted billions or even tens of billions of dollars trying to make that happen. It likely overpaid for WhatsApp when it dropped $19 billion on the messaging app in 2014, and its biggest product successes in social media recently have been borrowed, like Stories from Snapchat and Reels from TikTok. Nonetheless, the company has built the world's biggest social media platform and an advertising business that is only topped by Google Search, and that's made Meta an unstoppable cash cow. Now, after struggling to take VR headsets mainstream for roughly a decade, Meta now seems to have its best candidate for a legitimate hit product. According to The Verge, CEO Mark Zuckerberg told employees that the company sold more than 1 million Meta AI glasses in 2024, the vision tech it teamed up with Ray-Ban to make. Now, Zuckerberg thinks glasses sales could go from 1 million to as high as 5 million this year. Advertising makes up nearly all of Meta's revenue, and that's been the case for its entire history. In 2024, Meta generated $160.6 billion in ad revenue out of $164.5 billion in total revenue with $2.1 billion coming from Reality Labs, the division that includes AI products like its smart glasses. Zuckerberg talked up the potential of the glasses on the earnings call, saying, "Our Ray-Ban Meta AI glasses are a real hit." He also set the stakes for the new product, saying that 2025 would be the year that determines if the Meta AI glasses are the kind of product that can eventually sell hundreds of millions of units. For years, Zuckerberg has insisted that the company needs to control the next computing platform after having had to play by Apple's rules in mobile and smartphones. After its bet on the metaverse flopped, the Meta AI glasses are now its best bet to own a meaningful hardware platform, whether it becomes the next dominant computing platform, gives Meta its own outlet into a number of other revenue streams, including games and its own version of the App Store, monetizing AI features, selling ads, and expanding the larger ecosystem around its social media platforms and engagement. Zuckerberg is bullish enough on the AI glasses to say, "It's kind of hard for me to imagine that a decade or more from now, all the glasses aren't going to basically be AI glasses." Most of the "Magnificent Seven" stocks have one primary business that makes up the bulk of its revenue, but that's especially true of Meta, given that advertising makes up nearly all of its revenue. Diversifying its business will make the company more resilient and give it another revenue stream that it can count on when digital advertising, which is a cyclical business, pulls back. It's too soon to say whether Meta AI glasses will be the hit product that Zuckerberg hopes it is. Meta doesn't need the glasses to be a hit. The advertising business will continue to dwarf it for years to come, but finding a hardware platform could help take the stock to the next level. Meta stock is a buy with or without the glasses. The company enjoys a number of competitive advantages, including its massive user base, which drives its advertising business, and it trades at just a modest premium to the S&P 500, even though it's growing much faster than the index. However, building a mainstream hardware platform would justify the company's efforts in Reality Labs, and help drive growth in the business over the next decade. It would be a major win for the company if it can pull it off.