1 Great Artificial Intelligence (AI) Stock You Can Buy and Hold Forever
That wasn’t that long ago Meta platforms (dead -0.40%), the parent company of Facebook, was facing serious problems. Revenues were creeping up, at best, expenses were rising, and the bottom line was moving in the wrong direction. Meta Platforms stock fell significantly between mid-2021 and 2022 due to these headwinds.
However, the tech giant has since recovered, in a big way. Let’s find out why the company’s stocks are worth buying and staying in a growth-oriented portfolio forever.
Impressive Q4 results from Meta Platforms
One reason Meta Platforms has been able to recover is that it has begun cost-cutting efforts, from reducing the size of its workforce to reducing its real estate footprint. The technology company also enhanced the use of artificial intelligence on its platform. For example, Meta’s Reels on Instagram and Facebook — short videos in the style of the wildly popular TikTok — use an AI-powered recommendation algorithm to keep users glued to their screens. Meta Platforms was also confident that although the ad market was suffering, things would return to normal.
Mita’s hopes and efforts were richly rewarded. The company’s fourth-quarter results show that. Meta’s revenue of $40.1 billion jumped nearly 25% year over year.
We’ll have to go back to 2021 to see stronger growth rates for the company’s top line. Meanwhile, Meta Platforms’ costs and expenses fell 8% to $23.7 billion. The tech giant’s net income was about $14 billion, which was 201% higher than the same period last year.
Lots of growth opportunities
Following its impressive Q4 results, Meta Platforms stock has soared, with its market capitalization surpassing the $1 trillion mark once again. Only a small group has managed to achieve this feat, but it’s hardly a ceiling for a tech company. There’s still plenty of fuel left in Meta’s growth engine. The company finished 2023 with 3.98 billion monthly active users, an increase of 6% year over year. This is more than half of the world’s population.
This massive ecosystem is Meta Platforms’ secret weapon, as it can monetize in countless ways. Meta still makes most of its money from advertising. In the fourth quarter, advertising revenue reached $38.7 billion, equivalent to 96.5% of the company’s total revenue. Advertising sales rose 23.8% year over year. Meta Platforms’ “other” revenue of $334 million was 81.5% higher than the same period last year.
This growth was primarily driven by business messaging via WhatsApp. The company is redoubling its efforts to monetize WhatsApp through commercial messaging, among other initiatives. Although it still represents a small percentage of its total revenue, this could be a huge opportunity given the large Meta Platforms ecosystem. It is just one of the company’s growth initiatives.
The company is also looking to make waves in the fast-growing generative AI market, although that won’t contribute much to its revenue any time soon. However, Meta Platforms should succeed in supplementing its strong advertising business with other useful revenue streams in due course.
Meta is now a dividend stock
Meta Platforms gave another reason to love the stock during its fourth-quarter earnings release: The company will begin paying a quarterly dividend. It’s too early to know whether Meta platforms will become… great Dividend stocks, though, do have some of the necessary qualities to do so. Meta Platforms’ core business is strong, has generally achieved consistent revenue and earnings growth, boasts multiple growth avenues, and benefits from a strong moat of network effect.
These factors also make Meta Platforms an excellent stock to buy and hold forever. The tech company may face problems as it did in 2021 and 2022. But over the long term, Meta Platforms should provide market-beating returns for patient and loyal investors.
Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Prosper Junior Bakiny has positions on Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.