Despite its focus on its LLaMa large language model and new devices like Ray-Ban smart glasses, discussions revolving around investments in top artificial intelligence (AI) stocks have mostly excluded Meta Platforms (NASDAQ: META) .
Instead, Nvidia is considered the clear leader in AI hardware, while the financial media has portrayed Microsoft and Alphabet as battling for supremacy in user-facing AI, including chatbots like ChatGPT and Gemini, cloud infrastructure, and productivity software.
But Meta is proving that potential investors can't continue ignoring its advances in the AI space. The stock has soared since the generative AI race began with the launch of ChatGPT, and it has outpaced its peers in the " Magnificent Seven ", like Microsoft and Alphabet, in revenue growth over the last four quarters.
Meta just reported 22% revenue growth to $39.1 billion in the second quarter, and operating income surged 58% to $14.8 billion as the company benefits from earlier layoffs and other cost controls.
However, while investors were impressed by the company's results, sending the stock up 7% after hours, there was one statement in particular from CEO Mark Zuckerberg that could be a game changer for Meta Platforms.
Image source: Getty Images.
The new king of AI?
Zuckerberg began the earnings release by telling investors, "Meta AI is on track to be the most used AI assistant in the world by the end of the year." That's a statement that few analysts would have expected to be true a year ago
While ChatGPT has gotten much of the attention in the generative AI race, Meta AI is emerging as a dark horse, ready to displace the chatbot that kicked off the generative AI era. If Zuckerberg is correct, Meta's AI chatbot will be ahead of ChatGPT, Microsoft's Copilot, and Alphabet's Gemini, making his company the leader in generative AI, at least according to one key metric, usage.
Much like Apple has with its iPhone, Meta's properties, which include Facebook, Instagram, and WhatsApp, have allowed it to establish close relationships with customers. That's something that Microsoft and Alphabet's Google don't have, because their AI properties are mostly used for work or research.
Beyond Meta's surprising forecast for its chatbot, Zuckerberg also painted a compelling vision for the company's future in AI.
For example, he envisions his company using AI to generate creative content for advertisers and personalize it for its intended audience. Eventually, Zuckerberg sees the technology being able to handle the entire marketing campaign with just a business objective and a budget. That would be a huge win for the advertisers that make up the company's customer base.
He also said Meta wants to provide every business on his platform with an AI agent, and he believes this will be a staple of commerce in the future.
The success of Meta AI is also reflected in the company's broad and growing reach. It finished the quarter with 3.27 billion daily active users, up 7% from the year before -- or more than 40% of the world's population. The average American adult spends 34 minutes a day on Meta properties, showing why the company is poised to take the lead in AI assistants.
Before ChatGPT was launched, Zuckerberg said it was incumbent that Meta control the next computing platform. At the time, he envisioned that as the metaverse, but it now seems clear that it will be generative AI, and Meta looks to be just as ready for that transition.
Is Meta stock a buy?
The company doesn't have a direct way to monetize Meta AI, but it doesn't need one. As it grows and engages its audiences, businesses will spend more money on advertising to reach them and sell more products and services through its sites, growing Meta's revenue and strengthening its platforms in turn.
The company continues to burn billions of dollars each quarter on Reality Labs, and it's unclear if that experiment will ever pay off. However, the core business is profitable enough to support that adventure, and Meta still trades at a modest valuation. Based on its after-hours price Wednesday, the stock is valued at a price-to-earnings ratio of 26.5, essentially in line with the S&P 500 .
But Meta Platforms is still seeing explosive growth, and it now looks to be a surprising winner in the AI chatbot race. The stock belongs in any AI portfolio and should continue climbing given its momentum, its extensive reach through its apps, and its prowess in artificial intelligence.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .
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