Rosalind Evans
Meta Platforms’ strategic shift from metaverse development towards artificial intelligence (AI) has the potential to alter the industry’s landscape drastically. Since February, Meta Platforms (NASDAQ: META) has embarked on a vigorous initiative to incorporate AI into every facet of its operations. While industry giants like Microsoft and Alphabet have primarily dominated the scene with breakthroughs akin to ChatGPT, Meta Platforms appear to be gaining momentum. Meta’s CEO Mark Zuckerberg indicated a plethora of significant advancements during a companywide meeting in early June.
As Meta Platforms swerves towards AI, it is quickly rolling out various innovative solutions. These range from those augmenting the company’s primary operations to those suggesting the advent of entirely new product lines and revenue streams. This evolution could significantly impact the company’s future valuation. Here’s a more detailed look into it.
Enhancements to existing products
The primary application of AI is to bolster Meta’s existing products. During the companywide meeting in Silicon Valley, Zuckerberg explained how generative AI could enhance Meta’s flagship products. Imagine altering your Instagram images using textual prompts or incorporating AI chatbots with distinct personas into Messenger and WhatsApp.
For Meta investors, this is merely the beginning. Remember, the company’s core business revolves around advertising. At this year’s Cannes Lions event—a key annual occurrence for the global advertising sector—Meta showcased how generative AI could spawn novel advertising formats. Meta aims to boost its advertising partners’ creativity, enabling them to achieve a higher ROI from their social media campaigns on Meta’s platforms.
Introduction of new products
For Meta investors, the real thrill comes from introducing new products, potentially opening up new revenue streams. Take MusicGen, an AI music tool that enables users to generate music using textual prompts. Or consider Voicebox, an AI voice tool that can replicate any voice in six languages with remarkable precision.
Moreover, investors aren’t solely reliant on Meta to innovate. The company has adopted an open-source approach toward AI, inviting external developers to exploit its technology commercially. This sharply contrasts with other tech companies who prefer to keep their top-tier technology closely guarded. But in Meta’s perspective, having more developers interact with its technology is advantageous as it helps grow the company’s overall AI ecosystem.
Can Meta Platforms successfully transition away from the metaverse?
Moving away from the metaverse to AI will take a lot of work. Critics will be plentiful. Back in 2021, Meta Platforms had staked its future on the metaverse, a gamble that now appears to have been a costly, multibillion-dollar blunder. Can investors trust Meta again after a misstep of this magnitude?
This is why Meta’s aggressive pursuit of AI breakthroughs is invigorating. It might have initially conceded the pioneer advantage to competitors like Microsoft and Alphabet, but Meta is now laying down a compelling AI strategy. While Meta has been cautious to clarify that AI isn’t meant to supplant the metaverse, it’s evident that the advent of ChatGPT-like AI has sparked the company’s innovation.
Should you invest in Meta Platforms?
During the annual reshuffling of popular stock indices tracked by major institutional investors in June, FTSE Russell announced that it would reclassify Meta’s status from a “value” to a “growth” stock. This is primarily attributed to Meta’s successful transition towards AI from the metaverse. The narrative is shifting from downsizing and cost-cutting to growth and revenue generation.
The stock’s over 130% surge year to date serves as an excellent reason. Investors are gradually recognizing that Meta is indeed making a turnaround. If some of the upcoming AI-centric products from Meta are industry disruptors, massive profits could be on the horizon.
Meta Platforms’ over 130% surge in stock value year to date is a testament to its strategic AI pivot. Investors gradually acknowledge that the company is steering its course in the right direction, setting a new approach towards AI innovation. As Meta introduces new AI-centric products and builds its AI ecosystem, the potential for huge gains and industry disruption grows. Despite the challenges and skeptics, Meta’s AI-focused strategy shows promising signs of being a transformative force in the tech industry.
