Is Meta Platforms a Top Artificial Intelligence (AI) Stock to Buy Now?

Meta Platforms (META), the parent company of Facebook, Instagram, and WhatsApp, has been making significant strides in the artificial intelligence (AI) space. With its Llama AI model gaining traction and rapid adoption by major clients, investors are wondering if Meta Platforms is a top AI stock to buy now. This article explores the potential of Meta's AI initiatives and their impact on the company's earnings, cash flow, and stock performance.

Meta's AI investments, particularly its Llama model, have shown promising growth. From January to July 2024, Llama's usage grew tenfold, demonstrating its potential as a leading AI model. Meta is developing Llama 4, with computing power requirements expected to be 10 times greater than Llama 3. Despite concerns about increased capital expenditures in 2025, Meta's AI leadership could be worth billions.



However, Meta's AI spending may weigh on earnings in the near term. The company is expecting significant capital expenditures growth in 2025, which could impact earnings in the coming quarters. Investors should consider Meta's strong core business, which generates stable advertising revenue, and its potential to maintain a significant client base using its AI model post-investment phase. Additionally, Meta's dividend and share repurchases can provide income and value to shareholders during this transition.



Meta's AI strategy is heavily focused on generative AI, with its Llama model gaining traction among clients like AT&T and Goldman Sachs. However, its AI spending is a concern for some investors, as it may weigh on earnings in the short term. In comparison, Alphabet, another tech giant, has a more diversified AI strategy, including search and YouTube, which may provide resilience during economic downturns. Meta's advantage lies in its vast user base and advertising revenue, which could be augmented by AI-driven improvements. Yet, its reliance on a single revenue stream and potential exposure to an economic downturn are notable disadvantages.

In conclusion, Meta Platforms' AI initiatives show promising long-term growth prospects. Llama's adoption by major clients like AT&T, Goldman Sachs, and Shopify demonstrates its potential. Meta's investment in AI, despite short-term expenses, could lead to significant revenue growth and transform its business model. As AI becomes more integrated into Meta's platforms, it could drive user engagement and ad revenue, making it a top AI stock to consider. However, investors should be aware of the potential short-term risks associated with Meta's AI spending and consider the company's strong core business and income-generating capabilities.