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As Artificial Intelligence (AI) Stocks Fall, Investors Should Consider Buying More of These 2 Powerhouses
METAMeta Platforms(META) The Motley Fool·2025-03-15 10:45

Group 1: AI Market Overview - AI stocks have shown outstanding gains in 2023 and 2024, but face challenges in the current year due to external factors [1][2] - Investors are adopting a risk-off approach amid concerns of a U.S. economic slowdown, leading to stock pullbacks for major AI companies despite solid quarterly results [2] Group 2: Nvidia's Performance - Nvidia's shares are down 17% in the last month, yet the company reported strong quarterly results, with a trailing P/E ratio of 38, indicating attractive valuations [4][5] - Nvidia's fiscal 2025 earnings surged by 130% to 2.99pershare,withrevenuemorethandoublingto2.99 per share, with revenue more than doubling to 130.5 billion [5] - The company anticipates a 65% year-over-year increase in Q1 fiscal 2026 revenue, with analysts projecting 50% earnings growth for the current fiscal year [6] Group 3: Nvidia's Product Demand - Demand for Nvidia's Blackwell GPUs is robust, with 11billioninsalesduringthefiscalfourthquarter,contributingsignificantlytodatacenterrevenue[7][9]−BlackwellGPUsoutperformprevious−generationprocessorsinAIinferencing,drivingincreaseddemandaslargelanguagemodelsgaintraction[8]−Nvidiaholdsanimpressive8511 billion in sales during the fiscal fourth quarter, contributing significantly to data center revenue [7][9] - Blackwell GPUs outperform previous-generation processors in AI inferencing, driving increased demand as large language models gain traction [8] - Nvidia holds an impressive 85% market share in the AI chip space, benefiting from customers lowering operating costs while boosting performance [9] Group 4: Meta Platforms' Growth - Meta Platforms' stock has retreated 16% recently, trading at 26 times trailing earnings, making it an attractive buy [11] - The digital advertising market grew by 12% last year, while Meta achieved 22% growth in 2024, generating 164 billion in revenue and a 60% increase in earnings to 23.86pershare[12]−AItoolsareenhancingMeta′sadvertisingeffectiveness,leadingtoa1423.86 per share [12] - AI tools are enhancing Meta's advertising effectiveness, leading to a 14% year-over-year increase in average ad prices [13][14] Group 5: Meta's AI Advertising Tools - Meta's AI tools have driven a 32% increase in return on spending for advertisers, with over 4 million advertisers using generative AI ad creative tools, a fourfold increase in six months [14][15] - The Advantage+ shopping campaigns have surpassed a 20 billion annual run rate, growing 70% year-over-year in Q4 [15] - The digital ad market is projected to grow at 15% annually, providing Meta with significant growth opportunities in the long run [16]