"Meta Platforms ( NASDAQ:META) shares are back on the ascent after briefly dipping below 25% from peak levels, thanks in part to a calming of the tech and AI waters, as well as recent news that the firm is looking to trim its metaverse budget by around 30%. In a prior piece dated just last week, I suggested that Meta Platforms cut from its Reality Labs rather than its AI efforts."
"At this juncture, it feels like AI is the prime-time technology as the revolution looks to shift from a rapid buildout stage to more of a monetization stage. Though investors should be patient, as hefty front-loaded investments might make the relatively slow and steady trickling in of returns look quite small in comparison. But what happens if the monetization potential ends up far exceeding the cost of investment at some later point down the road?"
Meta Platforms is reducing its metaverse/Reality Labs budget by about 30% while maintaining AI as the top priority. AI is moving from rapid buildout to a monetization phase, which may require patience because large, front-loaded investments can make early returns appear small. There is potential for monetization to far exceed investment costs over time, but short-term expectations may be overestimated while long-term potential is underestimated. The November dip in AI stocks created buying opportunities for patient investors. Competition and commoditization of AI models present risks that could deter some investors.
Read at 24/7 Wall St.
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