Meta Platforms: The Unexpected AI Champion?

While the investment world's attention is focused on Nvidia, Microsoft, and Alphabet, Meta Platforms has established itself as an emerging player in the field of Artificial Intelligence (AI). Although the company is intensely working on its large language model LLaMa and new devices like Ray-Ban Smart Glasses, it often remained overlooked in discussions about leading AI stocks. Nvidia is considered the undisputed market leader for AI hardware, while Microsoft and Alphabet vie for supremacy in user-facing AI, including chatbots, cloud infrastructure, and productivity software. However, Meta is on a steep upward trajectory and has made impressive strides despite the competition. Meta reported a 22% increase in revenue to $39.1 billion in the second quarter and a 58% rise in operating income to $14.8 billion. This development is partly due to previous layoffs and other cost-cutting measures. CEO Mark Zuckerberg surprised investors with the statement that "Meta AI is on track to become the most widely used AI assistant in the world by the end of the year." A bold promise that could have significant implications for Meta's market position. Largely unnoticed in public discussion, Meta AI could surpass established competitors like ChatGPT, Microsoft’s Copilot, and Alphabet's Gemini. Through its platforms Facebook, Instagram, and WhatsApp, Meta enjoys proximity to users that Microsoft and Alphabet, due to their primarily work-related use, cannot achieve. Zuckerberg also outlined a promising future for the company's AI applications. There are plans to use AI to create and personalize creative content for advertising customers and long-term to manage entire marketing campaigns. This could significantly benefit advertisers who form Meta's main customer base. With 3.27 billion daily active users and an average daily usage time of 34 minutes per U.S. adult, Meta shows impressive numbers that underscore the company's potential in the AI sector. Since the introduction of ChatGPT, it has become essential for Meta to control the next technology platform—the focus has now shifted from the vision of the Metaverse to Generative AI. Although Meta AI currently does not have direct monetization potential, it is assumed that an increase in the user base will lead to higher advertising spend and thus indirectly to rising revenue. Despite high expenditures for Reality Labs, the core business remains profitable and can support these innovations. With a price-earnings ratio of 26.5, the stock is within a solid valuation range. Ultimately, Meta Platforms could emerge as a surprising winner in the race for AI chatbots. The stock seems indispensable for any AI portfolio and could continue to gain value given the current momentum and extensive reach.