"The stock has delivered strong returns over the years, but occasional missteps - like the billions spent on the metaverse with limited short-term payoff - have raised doubts about capital allocation. Similar worries surface today around heavy AI spending."
"Every tap, like, video view, and message generates behavioral data that trains Meta's recommendation engines and large language models in real time. Competitors can license open-source models or rent cloud compute, but they cannot replicate billions of daily interactions feeding proprietary AI systems continuously. This is Meta's closed-loop flywheel: users generate data that leads to better AI, creating higher engagement, and even more users - it creates network effects on steroids."
Meta has evolved from a social media operator into a broad technology powerhouse spanning advertising, messaging, hardware, and artificial intelligence. The platforms reach more than 3.5 billion people every day across Facebook, Instagram, WhatsApp, and Messenger, generating massive volumes of real-time behavioral data. Every tap, like, view, and message directly trains recommendation engines and large language models, producing a closed-loop flywheel where superior AI drives higher engagement and creates additional training data. Past metaverse investments and current heavy AI spending have prompted capital-allocation scrutiny, but the unique scale of proprietary interactions and integrated AI is widening a durable competitive moat.
Read at 24/7 Wall St.
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