"Artificial intelligence (AI) has driven strong returns for leading tech companies, including the " Magnificent Seven," but some of these leaders still offer solid growth prospects at reasonable prices. Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are seeing real benefits from using AI to offer better recommendations for users, boost returns for ad buyers, and ultimately charge more for ads."
"With over 3 billion people using Facebook and Instagram, Meta Platforms has built a powerhouse advertising business. It is widening its competitive moat by using AI-powered ad tools to deliver better recommendations and more effective ad targeting for advertisers. This is increasing return on ad spending and, in turn, driving higher ad pricing, which helped drive a 26% year-over-year increase in the company's revenue last quarter."
Artificial intelligence has driven strong returns for leading tech companies and supports solid growth prospects for some industry leaders. Meta Platforms and Alphabet use AI to improve recommendations, boost returns for ad buyers, and enable higher ad pricing. Meta has over 3 billion Facebook and Instagram users and is widening its competitive moat with AI-powered ad tools that increase return on ad spending and drove a 26% year-over-year revenue increase last quarter. Wall Street projects roughly 16% annualized earnings growth for Meta, supporting a forward price-to-earnings multiple of 21 at a $646 share price. Management plans aggressive AI infrastructure spending that may pressure margins short-term but could deliver larger long-term payoffs, creating an opportunity for patient investors.
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