Could This Be the Most Underrated Artificial Intelligence Play on Wall Street?

Core Viewpoint - Meta Platforms is positioned as an underrated and undervalued player in the growing AI market, often overlooked compared to chipmakers and cloud giants [1][2] Group 1: Company Overview - Meta serves an average of 3.54 billion daily active users across its apps, up from 2.82 billion in December 2021, establishing a strong presence in the digital advertising market [4] - The company generates most of its revenue from targeted ads, holding a near-duopoly with Alphabet's Google [4] Group 2: Financial Performance - In 2022, Meta's ad sales stagnated due to changes in Apple's data tracking policies and competition from TikTok, leading to increased spending on its Reality Labs segment, which negatively impacted operating margins [5] - Revenue growth for Meta was 37% in 2021, but fell to 1% in 2022, with a recovery to 16% in 2023 and projected growth of 22% in 2024 [6] - Operating margins decreased from 40% in 2021 to 25% in 2022, but are expected to recover to 42% in 2024 [6] Group 3: Strategic Initiatives - Meta expanded its Reels platform and launched Threads to compete with TikTok and X (formerly Twitter), enhancing user engagement and advertising revenue [7] - The company plans to invest $600 billion into infrastructure and jobs by 2028 to strengthen its AI ecosystem, prioritizing AI development over short-term profits [9][10] Group 4: Future Outlook - Analysts project Meta's revenue and EPS to grow at a CAGR of 18% and 12% from 2024 to 2027, with the stock currently valued at 21 times next year's earnings [11] - The growth of Meta's core advertising business is expected to offset rising AI costs, supported by an increase in users, ad impressions, and ad prices [12] - The recent decline in stock price post-earnings may present a buying opportunity for long-term investors [13]