AI in Focus: Meta and Microsoft in a New Light from Analysts

The technology sector has been significantly contributing to market developments for a year now, with AI stocks being particularly in the spotlight. Artificial Intelligence promises to revolutionize the tech world and reshape the general economy. This presents immense opportunities for investors, although not every AI stock will fully capitalize on these possibilities. Some companies are already leading innovation fronts or promising higher returns, prompting analysts on Wall Street to diligently work on identifying the abundant opportunities. At Oppenheimer, two highly esteemed analysts observe the divergence between Meta Platforms and Microsoft, both of which are currently causing a stir in the AI sector: Microsoft has long been committed to generative AI, while Meta has recently reported innovative applications of this technology. But which company is considered the superior AI stock in the eyes of the investment bank? Meta Platforms: Let's start with Meta, the parent company of Facebook. The company is a leader in the social media sector, reaching an impressive 3.27 billion daily active users in the second quarter of 2024. This represents almost 40% of the world population and is a formidable asset. The main revenue driver is digital advertising, with Meta reporting a 22% year-over-year revenue growth in the past quarter. In addition to solid figures, Meta has a promising future in the AI field, notably through its developments in generative AI such as the open-source model Llama and the AI chatbot Meta AI. Analyst Jason Helfstein describes Meta AI as crucial for the company's future. Microsoft Corporation: Known as a pioneer in the PC sector, Microsoft has achieved success over the years through proven products. It is now heavily investing in AI technology, particularly through a multi-billion dollar investment in OpenAI. This has secured Microsoft a significant share in OpenAI's future earnings, leading to the integration of AI into products such as Bing and the Azure cloud. Despite strong numbers, such as revenue of $64.7 billion in the last quarter, analyst Timothy Horan expresses concerns about potential challenges and doubts margin improvements in the short term. Despite concerns, Wall Street's opinion on Microsoft remains positive. Analysts overall rate the stock with a consensus "Strong Buy.