When you think of buying artificial intelligence (AI) stocks today, one of the first names that comes to mind is probably: Nvidia. There’s a good reason for that. Nvidia is the largest seller of AI chips, accounting for over 80% of the market share, which has driven its recent record revenue and impressive share performance.
Nvidia is also one of the industry’s leading stocks, nicknamed the Magnificent Seven after the 1960 movie. These stocks have led the market’s rally over the past year thanks to their focus on growth and AI hot spots. But his Nvidia isn’t the only game in the game for investors looking to ride the AI boom. In fact, another member of the Magnificent Seven says he is cheaper than Nvidia and on track to become an AI powerhouse.
So you might want to hold off on buying Nvidia for now and take advantage of this more attractive opportunity to buy the Magnificent Seven.
Image source: Getty Images.
social media empire
So what stocks am I talking about? The company has built a social media empire and has recently poured investments into AI, aiming to leverage it across its products and services.what i’m talking about is meta platform (meta -1.57%).
You’re probably familiar with Meta thanks to its array of major social media apps, including Facebook, Messenger, Instagram, and WhatsApp. The company makes most of its revenue through advertising across these platforms. These platforms are such popular apps that advertisers flock to them to reach us, their potential customers.
This has allowed Meta to grow its revenue to billions of dollars over the past few years.
META Net Income (Annual) Data by YCharts
And the meta will likely continue to maintain this dominance for two reasons. First, it offers a wide range of social media apps, which allows the company to appeal to different age groups and interests. Second, switching to another social media platform takes a significant amount of time and effort. Additionally, Meta’s platform is widely used around the world. These points keep users coming back.
This is great. Because we can expect this revenue driver to support the large-scale AI initiatives that Meta has prioritized. Meta CEO Mark Zuckerberg said AI will be the company’s “biggest investment area” this year, from engineering to computing resources.
By the end of this year, Meta aims to have 600,000 graphics processing units (GPUs) to power its AI programs. One of Meta’s big projects so far has been the development of the Llama Large-Scale Language Model (LLM), with Llama 3 currently in the training phase. The company focuses on open source processes where anyone can access common infrastructure such as his Llama model.
Betting on victory for the meta
This could be a winning bet for Meta, as open sourcing allows certain tools, such as Llama, to get more use and feedback from the community. This will make the platform more secure, potentially make it an industry standard, and also drive top talent to the meta.
Meta has already rolled out various AI tools across its social media platforms. For example, AI stickers and virtual assistant Meta AI, both of which leverage his Llama 2 technology. Zuckerberg said his future goal is to make AI accessible to all Meta users. From AI assistants to AI tools that help businesses better serve their customers, we have the tools to suit your needs.
These features encourage meta users to spend more time on apps, which in turn makes these apps a destination of choice for advertisers. Therefore, Meta’s investments in AI now should drive revenue growth in the future.
All of this could transform Meta into a leader in the AI industry and also open the door to new revenue opportunities.
Next, let’s consider meta evaluation. With a solid growth track record and promising AI prospects, it’s a surprisingly low investment to get into this stock. It trades at just 25 times forward earnings estimates. This compares to 37x for Nvidia.
Of course, these companies are taking different initiatives in the world of AI. Nvidia sells AI chips and other products and services to develop its AI platform. Meta is actually his Nvidia customer and buys GPUs from this market leader. However, both of these Magnificent Seven companies are profitable and have the potential to continue to grow in the AI space. And now, Meta’s investment in AI and cheap valuation make it a great stock to buy without hesitation.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Adria Cimino has no position in any stocks mentioned. The Motley Fool has a position in and recommends MetaPlatform and Nvidia. The Motley Fool has a disclosure policy.
