Meta's AI-Driven Resurgence: From Metaverse Skepticism to AI Powerhouse

The secret AI sauce behind Meta stock's 683% rise since the dark days of 2022

Picture scrolling through Facebook or Instagram and spotting an advertisement that feels tailor-made for you. You're seeing Meta Platform 's artificial intelligence tools in action, crafting ads for its partner businesses that specifically target and attract customers based on their interests. It has also become the secret sauce behind Meta's wildly success ad unit driving its stellar financial performance and stock performance. But few could see Meta's path to AI dominance just a few years ago. In 2022, the social media giant hit a low as investors balked at CEO Mark Zuckerberg's costly metaverse project and Apple's privacy changes disrupted its ad business. Meta shares fell by more than 60% in 2022, at one point closing as low as $88.91 a share. Then came Zuckerberg's "Year of Efficiency" in 2023 aimed at reversing the tide with layoffs and a focus on profitability. Meta quickly rewarded its loyal investors with a nearly 200% stock jump that year, as its AI-enhanced ads revived revenue growth and the company's cost cuts jumpstarted earnings. And despite lingering concerns over the company investing too much and too quickly in the nascent technology, it was hard to argue with the results. Meta delivered revenue and earnings beats for all four quarters of fiscal 2024. Jump to 2025 and Meta has fully repositioned itself as an AI-first company, one of the most celebrated in the field. The company's open-source Llama large language models are the cornerstone of its strategy, competing against the likes of OpenAI's GPT-4 and Google's Gemini. Zuckerberg's investments in data centers and hardware aim to secure the company's long-term edge. Building these large powerful AI models is critical to having "control of our own destiny" in powering the various AI opportunities Meta is focused on, Zuckerberg has said, emphasizing improved advertising and user experiences. As of Wednesday's close, its stock is up roughly 683% since that November 2022 closing low. Meta's AI strategy has not been without hurdles. The company delayed the release of Behemoth, its most advanced large language model, originally slated for April, until the fall or later due to performance issues. At the same time, Llama 4's release didn't generate much enthusiasm, fueling perceptions that Meta was falling behind in the AI race. The challenges compounded when 11 out of 14 AI researchers left the company amid intensified competition. The biggest risk to Meta's stock is losing its lead on the cutting edge of AI, said Gil Luria, analyst at D.A. Davidson, who noted that the underwhelming Llama 4 opened the door to competitors, including OpenAI, Anthropic and some Chinese models. Indeed, Zuckerberg personally stepped in to recruit top talent to stay out front, including bringing back Robert Fergus, a former Google DeepMind researcher and previous Meta employee, to enhance the AI division. Earlier this month, Meta made another major move investing $14.8 billion for a 49% stake in data-labeling company Scale AI and hired its CEO to lead a new "superintelligence" research lab, joined by Scale AI staff. In a sign of its aggressiveness, Meta also offered employees at OpenAI bonuses of $100 million to leave the ChatGPT creator, OpenAI CEO Sam Altman said on a recent podcast . Key growth ingredient So what exactly has made Meta's AI so special? The company's newest Llama 4 is "multimodal," which means it can process and learn from multiple types of data including text, images or backgrounds, similar to Google's Gemini and OpenAI's GPT-4 multimodal models. It powers Meta's ad growth by enabling advertisers to create tailored ads quickly and cost-effectively, and boosts engagement and performance across Facebook and Instagram. "Performance improvements from being multimodal benefit all applications," said Matt Steiner, Meta's VP of monetization infrastructure, ranking & AI foundations, in a CNBC interview. "Models trained on different data sources like images or videos or text all benefit from being trained on the same model," he added, noting this versatility drives better ad targeting and content creation. Steiner emphasized that this approach "helps us maintain our competitive edge in advertising by maximizing return on advertiser spend while controlling costs." Meta trails only Google in digital advertising, capturing 23% of global ad revenue in 2024 compared to Google's 28%, according to eMarketer. Meta's ad revenue rose 22% last year, outpacing Google's 12% and the industry's 9%. This growth, driven by AI-powered targeting, underscores Meta's momentum. "The ability to deliver better ads allows them to sell those ads for more, which is why they're gaining share in the digital ad market," said Luria, noting that Meta has been adept at using traditional machine learning techniques. He said Meta is taking this technology to an advanced level, "automating it further -- allowing advertisers to generate content and make even more well-informed decisions." This next wave, generative AI, "deepens Meta's competitive moat." He highlightdc an example of how Reels is becoming more compelling to users. That's because Meta is "getting better at the AI algorithm that allows them to serve the next best short video to keep the consumer engaged." The introduction of ads on WhatsApp, announced this week, also expands the reach of Meta's AI ad tools, creating a new place where it can generate high-margin revenue. Meta on Tuesday announced new generative AI tools for its Advantage+ platform, enabling advertisers to integrate brand elements into personalized ads and create animated videos from images with music and text overlays. The company is also testing a new feature in "Video Highlights" which uses AI summaries to better digest video ads by skipping to the highlights of the video. Looking ahead, Meta's generative AI advancements are enabling it to deliver a higher volume of personalized ads. The goal: To keep and strengthen its AI edge. As Meta's Steiner put it, the company's "compounding effects" of AI improvements fuel growth, which should help Meta make more gains in digital advertising. The company's financial and strategic commitment show Zuckerberg and Co. are in a league of their own in digital ads as Meta continues to take market share. We're confident in Meta's ability to keep innovating on its advertising tools using AI, keeping customers around and its business growing. We currently have a 2 rating on the stock with a price target of $750. (Jim Cramer's Charitable Trust is long META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Meta Platforms Stock Will Soar Over the Next 5 Years. Here's 1 Reason Why. | The Motley Fool

Over the last five years, Meta Platforms (META -0.69%) stock has been one of the best names to own. Its shares have generated a total return of 192%, far exceeding the S&P 500' index's total return of 102% over the same period. Yet, I think Meta can match -- or even exceed -- its past performance thanks to the rise of AI-powered advertising. First, some background. Meta generates an incredible amount of revenue, nearly $175 billion annually, or roughly $500 million per day. Almost all -- around 97% -- comes from selling ad space across its platforms like Facebook and Instagram. Currently, most of those ads are designed and produced by advertising agencies. These companies work with brands to develop and track ad campaigns. Think Mad Men but updated for the 21st century. That's where AI comes in. Meta has announced plans to begin rolling out AI-powered ads on its platform to allow brands to fully automate their advertising on Meta's systems by 2026. This is a big deal, because according to Statista, ad agencies in the U.S. alone generated nearly $64 billion in 2022. If Meta's AI-produced ads are a hit, the company could begin to take some share of this lucrative market away from traditional ad agencies. What's more, it's not a far-fetched idea. Many brands may be intrigued by what Meta's powerful AI could produce. In particular, Meta could use proprietary data to personalize ads, placing a custom-built ad into a user's feed. For example, Meta's AI could potentially use its powers of deduction to highlight the features most important to the prospective customer (safety, cost, reliability, etc.). In other words, these ads might be more effective than what ad agencies could ever hope to produce for a mass audience.

Does Meta Platforms' Massive $14.3 Billion Artificial Intelligence (AI) Bet Make the Stock a Buy Now? | The Motley Fool

Meta is spending big on Scale AI, but it's looking for more than the business. Meta Platforms (META -1.88%) is shaking up its artificial intelligence (AI) efforts and the industry as a whole. Earlier this month, it invested a total of $14.3 billion in Scale AI to take a 49% non-voting stake in the company and bring key personnel into Meta's laboratories. Despite the significant changes this brings to Meta and the industry, it's not what makes the stock a buy today. Artificial intelligence is extremely important to the future of Meta Platforms, and the potential impact of the technology still seems to be underappreciated by the market. Meta's stock price is attractive, and it would be a buy whether it made the move to invest in Scale AI or not. Scale AI provides curated and labeled data sets to frontier model developers for AI training. It can also provide evaluation and help improve reasoning models with the help of human experts. It works with many of the biggest names in artificial intelligence, providing key services to ensure they can put out the best products. Meta's investment includes a commercial agreement to spend $450 million per year on Scale's platform. Meta will likely gain access to proprietary data sets in an industry where good data has become incredibly important. More importantly, though, it brings Scale's founder and CEO Alexandr Wang onto Meta's payroll, where he'll head up a new AI "superintelligence" lab. Meta has struggled to attract top talent to its AI labs, and the disappointing results of its latest Llama AI model release have made the talent gap more clear. It reportedly offered huge incentive packages to poach OpenAI employees in an effort to win over talent to catch back up with the competition, but most rejected it. With its investment in Scale, Meta is hoping it can correct that issue. Building a leading-edge model is important for Meta, even though it provides its Llama models to the open-source community, albeit with restrictions for commercial use. CEO Mark Zuckerberg is more interested in the potential the most advanced AI systems could bring to Meta's existing products instead of making a product out of the AI model itself. But to build the best model with the most capabilities, it needs wide adoption from the developer community, and that won't happen if its performance is subpar. So, adding Wang to the AI team is a great start, but Meta would've likely found a way to attract talent one way or another. The potential value of AI to the company is just too high for it to remain a barrier forever. Meta is already working on a service that could be the start of a long runway of AI growth. On Meta's most recent earnings call, Zuckerberg described an AI agent that could take a marketing objective and a budget and take care of creating and running an entire ad campaign by itself. It would design the creative, figure out who to target, and optimize images, videos, copy, and targeting to meet those objectives. It could potentially create individualized ads for Facebook and Instagram users to help marketers meet their objectives with minimal costs. That's not some far-off dream, either. The company aims to offer the service by the end of next year, according to a report from The Wall Street Journal. Such a service would not only lead to marketers' willingness to pay for ads increasing (since they won't have to spend time or money on developing ad creatives), but it would expand the number of advertisers. Lowering the barrier to entry should lead more businesses to advertise on Meta's platform, which should support higher pricing for its ads due to higher demand. On top of that, Meta's ability to generate paid content for its users with artificial intelligence would also mean it can generate highly personalized and engaging entertainment content as well. That could lead to higher engagement rates and more time spent on the platform, increasing the number of ads shown and their value. Few companies are in as good of a position to capitalize on the potential of AI compared to Meta. Not only does it have a massive platform to deploy its AI capabilities, but it has the capital to invest in the future of AI. Its investment in Scale and move to bring Wang and other personnel in-house is the company using its competitive advantage to its benefit, which is what makes it a great investment. And with the stock trading for roughly 27 times forward earnings, it could prove a bargain at the current price.

Is Meta Platforms Stock a Buy Right Now? | The Motley Fool

Meta Platforms (META 2.05%) is the parent company of social networks like Facebook, Instagram, and WhatsApp. Meta stock could be a buy right now because of its attractive valuation and the company's strong revenue and earnings growth. Meta is currently supercharging its business with artificial intelligence (AI). It's using the technology to keep users engaged for longer periods of time, to launch new features, and to help businesses improve conversions with better advertising content. Plus, the company has developed one of the most popular open-source large language models (LLMs) in the world, called Llama. Read on. Over 3.4 billion people use Meta's social networks every single day. The company generates the majority of its revenue by selling advertising slots to businesses on those platforms, so more users equals more money in the door. But keeping each user online for longer periods of time is another valuable way to attract more advertising dollars, and AI is playing a massive role in boosting engagement. Meta's AI algorithm learns what each user likes to see, and it feeds them more of it. That's why your content feed on Facebook and Instagram is constantly filled with photos and videos you're interested in -- if you regularly watch videos of golden retrievers, Meta's AI algorithm will work overtime to show you more of them. Before you know it, a quick scroll has turned into an hour-long session. In fact, during his conference call with investors for the first quarter of 2025 (ended March 31), Meta CEO Mark Zuckerberg said AI-driven recommendations resulted in a 7% increase in the amount of time users were spending on Facebook over the previous six months, and a 6% increase on Instagram. But advertising on platforms with lots of users and high engagement doesn't guarantee success because businesses need to create ad content that attracts interest, fosters interactions, and ultimately converts. Meta thinks AI can do this better than the average small business operator, so it's rolling out new tools to automate as much of the process as possible. Zuckerberg says one day in the future, businesses will simply tell Meta their objectives (like boosting sales or brand awareness) and their budget, and AI will autonomously handle everything from crafting the ad creative to targeting the appropriate audience. LLMs sit at the foundation of every AI chatbot application. Meta has been developing a family of models since 2022 called Llama in order to compete with leading AI start-ups like OpenAI (which is responsible for ChatGPT). Llama LLMs are now among the most widely used open-source models in the world, and the latest Llama 4 family outperforms even some of the best closed-source models from OpenAI and Anthropic across several benchmarks. This is really important because the highest quality LLMs typically power the "smartest" AI software. Meta used Llama to create the Meta AI virtual assistant, which is accessible through Facebook, Instagram, WhatsApp, Threads, and Messenger, where it can answer questions on almost any topic and generate images on command. At the end of the first quarter of 2025, Meta AI had almost 1 billion monthly active users, which was up from 700 million just three months earlier. Meta will have to continue improving Llama if it wants Meta AI to stay competitive with other chatbots, which is why the company plans to allocate up to $72 billion toward capital expenditures (capex) this year alone. That money will go toward building additional AI data center infrastructure, which includes buying thousands of AI chips from top suppliers like Nvidia. Wall Street's consensus estimate (provided by Yahoo! Finance) suggests Meta could generate around $187 billion in total revenue this year, which puts the sheer scale of its AI capex spending in perspective. The enormous amount of AI-related capex is putting a dent in Meta's earnings power, but the company continues to deliver growth at the bottom line regardless, which makes its current valuation highly attractive. But Wall Street's consensus estimate (provided by Yahoo! Finance) suggests the company's annual EPS could grow to $28.48 in 2026. Meta's forward P/E ratio based on that estimate is 23.9, meaning its stock would have to climb by 11.3% over the next 18 months just to maintain its current P/E ratio of 26.6. However, Meta stock would have to soar by 42.6% over the next 18 months to trade in line with the median P/E ratio of the Magnificent Seven, which is 34.1. Considering the company's momentum in the AI space, I think there is a realistic chance this scenario will play out. In other words, yes, I think Meta stock could be a great buy right now.

Meta Is Comfortable Betting the House on AI, and Investors Should Pay Attention | Investing.com UK

Meta Platforms (NASDAQ:META) is making unprecedented moves in artificial intelligence, with CEO Mark Zuckerberg announcing plans to spend up to $65 billion in 2025 on AI infrastructure alone earlier this year. The social media giant's aggressive investment strategy includes major acquisitions like the $14.3 billion Scale AI deal, attempts to poach top talent from competitors, and ambitious plans to build artificial general intelligence. These bold investments signal Meta's determination to dominate the AI landscape, positioning the company as a serious contender in the race that could define the next decade of technology. Meta's recent $14.3 billion investment in Scale AI represents just the tip of the iceberg in Zuckerberg's AI master plan. The deal gave Meta a 49% stake in the data preparation company while bringing Scale AI founder Alexandr Wang directly into Meta's fold. This strategic move is likely based on Meta's understanding that high-quality training data is the foundation of superior AI models. Beyond Scale AI, Meta has been aggressively pursuing other AI startups and talent. Reports indicate the company attempted to acquire Ilya Sutskever's $32 billion Safe Superintelligence startup, though the former OpenAI chief scientist rebuffed the approach. Meta is also reportedly in advanced talks to partially buy out an AI venture fund run by former GitHub CEO Nat Friedman and Safe Superintelligence co-founder Daniel Gross for over $1 billion. The company's talent acquisition strategy extends to direct employee poaching, with OpenAI CEO Sam Altman publicly accusing Meta of offering $100 million bonuses to lure away key personnel. This aggressive approach reflects Zuckerberg's personal involvement in assembling a 50-person team specifically focused on achieving artificial general intelligence. Meta's investment spree comes at a critical time when AI infrastructure and talent are becoming increasingly scarce and expensive. By securing these resources now, Meta is positioning itself to compete directly with OpenAI, Google (NASDAQ:GOOG), and other AI leaders rather than relying on partnerships or third-party solutions. Meta's willingness to spend up to $65 billion on AI in 2025 alone stems from several key strategic advantages and market realities. First, the company's core social media platforms generate massive cash flows, providing the financial foundation for these enormous investments. With a profit margin of 39.11% and $66.64 billion in net income, Meta can afford to make bets that smaller competitors simply cannot. The company's open-source Llama AI models have already established Meta as a significant player in the AI space, differentiating it from competitors through free access for consumers and most businesses. This strategy builds ecosystem adoption while reducing dependency on external AI providers, creating long-term competitive advantages. Zuckerberg's frustration with Meta's latest Llama 4 model performance has only intensified the company's AI focus. Rather than accepting incremental improvements, the CEO is pushing for breakthrough capabilities that could leapfrog current market leaders. The planned 2-gigawatt data center, large enough to cover a significant portion of Manhattan, demonstrates the scale of computing power Meta believes necessary to achieve these goals. Meta's AI investments also align with broader infrastructure trends, following Trump's announcement of the $500 billion Stargate initiative. By moving quickly and decisively, Meta is positioning itself as a key player in America's AI infrastructure buildout, potentially benefiting from future government partnerships and contracts. Meta's stock performance reflects investor confidence in the company's AI strategy, with shares gaining 39.77% over the past year and an impressive 327.25% over three years. Trading at $695.77 with a market cap of $1.75 trillion, Meta's valuation metrics suggest the market is pricing in significant AI-driven growth expectations. Key financial metrics support the investment thesis: a forward P/E ratio of 27.47 indicates reasonable valuation relative to growth prospects, while the company's strong balance sheet with $70.23 billion in cash provides ample resources for continued AI investments. The modest debt-to-equity ratio of 26.76% gives Meta financial flexibility that many competitors lack. The company's revenue diversification beyond social media advertising into AI services, virtual reality, and enterprise solutions reduces dependence on traditional revenue streams. With analysts setting price targets ranging from $466 to $935, there's significant upside potential if AI investments pay off as expected. However, investors should consider the execution risks inherent in Meta's aggressive AI strategy. The $65 billion spending commitment represents a massive bet on uncertain technology outcomes, and competition from well-funded rivals like OpenAI and Google remains intense. Success will ultimately depend on Meta's ability to translate massive investments into market-leading AI capabilities and revenue generation. ***