Meta Platforms: The Rise to the Top of the S&P 500

The S&P 500 recently reached an all-time high, and Meta Platforms is the only member of the "Magnificent Seven" to accompany this altitude. Just two years ago, Meta was a prime example of a struggling technology giant. But today, the company is leading the artificial intelligence (AI) revolution and producing outstanding results in its core business: advertising. Investors have taken notice, and the stock price has more than quintupled since its low point nearly two years ago. A primary driver of this success is Meta's leading position in the AI sector. Although Nvidia continues to dominate the AI hardware market, Meta has created a fascinating AI ecosystem. At the Meta Connect conference, CEO Mark Zuckerberg announced that Meta AI has nearly 500 million active users per month and is on track to become the most-used AI assistant in the world, leaving competitors like ChatGPT and Microsoft Copilot behind. The daily use of platforms such as Facebook, Messenger, Instagram, and WhatsApp by nearly half of the world's population gives Meta a significant competitive advantage. This enables the company to implement new technology more efficiently and quickly. Meta also impresses with its vertically integrated large language model, Llama, and a variety of new features: users can interact with Meta AI, share photos, and utilize customizable AI solutions for customer service. Over a million advertisers are already using Meta's generative AI tools, which deliver significantly better results than traditional ads. After a slump in the advertising business in 2022 due to economic uncertainties, the situation has dramatically reversed. New products like Reels, improved AI, and e-commerce tools have led to strong growth. In the second quarter, Meta's advertising revenue increased by 22% to $38.3 billion, far exceeding the growth rates of Alphabet and Amazon in this area. Although Meta's stock appears highly valued with a price-earnings ratio of 29, the company has consistently exceeded earnings expectations in recent quarters and has numerous strategies for further growth enhancement. Significant investments in Reality Labs and innovative hardware projects such as virtual and augmented reality devices could provide additional growth impulses. For investors considering potential "moonshot" investments, Meta offers an interesting mix of stable advertising revenue growth and forward-looking technologies. The stock is well-positioned for further growth and may not yet fully reflect the potential that could be unleashed by new devices and technologies.