The time is right to buy shares of this big AI leader.
Like many investors, I'm enthralled by the opportunities unleashed by artificial intelligence (AI). I agree with predictions that AI could be as big (or bigger) than the internet.
Which AI stocks are likely to be the biggest winners? Different people will have different answers to the question. Here's my pick for the best mega-cap AI stock to buy right now.
One of the cheapest mega-cap AI stocks around
I like many of the mega-cap leaders in AI, including most of the so-called "Magnificent Seven" stocks. However, valuation is an important factor to me. Many AI stocks with market caps of $200 billion or more trade at a lofty premium. But not Meta Platforms (META -1.70%).
Meta's attractive valuation is a key reason I think it's the best mega-cap AI stock to buy right now. The company's shares trade at 22 times forward earnings, lower than most of its peers. Its price-to-earnings-to-growth (PEG) ratio, based on analysts' five-year growth projections, is only 1.02.
Some investors bailed on Meta after the company's first-quarter update. Shares are down roughly 17% primarily because of concerns about Meta's capital expenditures increasing as the company focuses on current money-losing AI and metaverse initiatives.
This sell-off was way overdone, in my view. Meta delivered strong revenue and earnings growth in Q1. I think the company's investments in AI and the metaverse will deliver strong returns over time. Meta CEO Mark Zuckerberg believes that'll be the case. He provided a reminder in the Q1 earnings call that the company's history shows that spending money to scale new technology "has been a very good long-term investment for us and for investors who have stuck with us."
How Meta can win with AI
AI is already making a difference in Meta's operations. Zuckerberg noted in the Q1 call that around 30% of Facebook posts are delivered by the company's AI recommendation system, double the level from two years ago. Over 50% of the content on Instagram is recommended by AI. The more content appeals to users, the more attractive Meta's social media platforms will be to advertisers.
Speaking of advertisers, Meta is using AI to help them improve their return on investment. Revenue flowing through two of the company's AI-powered tools, Advantage+ Shopping and Advantage+ App Campaigns, has increased more than 100% since last year.
Meta recently launched its smart glasses with AI vision integration. Customers can ask the Meta AI assistant questions about things they're viewing. Zuckerberg thinks there's a "meaningful market for fashionable AI glasses without a display."
He sees multiple ways for Meta to profit in a huge way from AI in addition to selling smart glasses. Placing ads or paid content in AI interactions is one possibility. Charging for access to large-scale AI models is another.
Perhaps the biggest near-term opportunity is using AI in business messaging. Meta is already testing functionality where businesses use AI assistants that interact with customers in chats. The feedback so far from businesses and consumers has been positive, according to Zuckerberg.
Timing is everything
Will Meta always be my favorite mega-cap AI stock? Almost certainly not. New AI developments are happening at a breakneck speed. Meta's valuation could increase so much that it's no longer attractive. Other AI stocks could fall and create great buying opportunities.
A year from now, I might like Alphabet, Amazon, Nvidia, or another big AI leader more than I do Meta. For now, though, Meta ranks at the top of my list.
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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Amazon, and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
FAQs
The Motley Fool has positions in and recommends Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla.
What is the best AI stock to invest in right now? ›
7 best-performing AI stocks
Ticker | Company | Performance (Year) |
---|
SOUN | SoundHound AI Inc | 62.57% |
HLX | Helix Energy Solutions Group Inc | 56.58% |
ISRG | Intuitive Surgical Inc | 22.70% |
FARO | Faro Technologies Inc. | 11.06% |
4 more rowsJul 17, 2024
What is the best AI penny stock to buy? ›
Top 10 AI Penny Stocks
- Happiest Minds Technologies ltd. ...
- Pagaya Technologies Ltd. (NASDAQ: PGY) ...
- SoundHound AI, Inc. (NASDAQ: SOUN) ...
- Perfect Corp. (NYSE: PERF) ...
- Himax Technologies, Inc. (NASDAQ: HIMX) ...
- Canaan Inc. (NASDAQ: CAN) ...
- Rekor Systems Inc (NASDAQ:REKR) Number of Hedge Fund Holders: 8. ...
- iCAD, Inc. (NASDAQ: ICAD)
Does Warren Buffett own any AI stocks? ›
44% of Warren Buffett's $366 Billion Portfolio Is Invested in 3 Widely Owned Artificial Intelligence (AI) Stocks.
What company is leading the AI race? ›
Microsoft. Microsoft, a leader in AI technology, leverages AI-powered tools and machine-learning models to enhance productivity and efficiency across industries.
What is the most promising AI company? ›
Artificial Intelligence
- Amazon Web Services. Amazon Web Services offers AI and machine learning (ML) solutions as part of its suite of services. ...
- Anthropic. Anthropic is a newer AI company. ...
- C3 AI. C3 AI provides a suite of AI products to help companies make critical business decisions. ...
- Databricks. ...
- DataRobot. ...
- Deep North.
What AI stocks will boom in 2024? ›
The Best AI Stocks of July 2024
Company (TICKER) | 1-Year Return |
---|
Palo Alto Networks, Inc. (PANW) | 45% |
ServiceNow, Inc. (NOW) | 37% |
Advanced Micro Devices, Inc. (AMD) | 30% |
UiPath, Inc. (PATH) | 19% |
6 more rowsJul 1, 2024
Who is the leader in AI? ›
Largest AI companies by market cap as of July 2024:
Apple. Microsoft. Alphabet. NVIDIA.
What penny stock can make you a millionaire? ›
Cronos Group (NASDAQ:CRON) is among the most undervalued penny stocks to buy with millionaire-maker potential. Considering the size of the cannabis market in U.S. and Europe, CRON stock can deliver 20x to 30x returns by the end of the decade. Of course, the key is successful execution of growth plans.
Which is the best AI coin to buy? ›
Top AI Crypto Coins for 2024
- Golem. Token: GLM. ...
- Internet Computer. Token: ICP. ...
- ChainGPT. Token: CGPT. ...
- Akash Network. Token: AKT. ...
- Theta Network. Token: THETA. ...
- AIOZ Network. Token: AIOZ. Category: Decentralized Content Delivery. ...
- PAAL AI. Token: PAAL. Category: AI Crypto Platform. ...
- 0x0.ai. Token: 0x0. Category: AI-Powered Privacy.
Compare the best AI companies
Company | Sector | Market cap |
---|
Nvidia | Technology | $3.04T |
Arm Holdings | Technology | $165.22B |
Spotify Technology | Communications services | $65.85B |
PROCEPT BioRobotics | Health care | $3.57B |
6 more rows
What is the best AI stock to buy under $5? ›
Keep reading to find out the best artificial intelligence stocks under $5.
- 6 Best AI Stocks Under $5. Looking to invest in AI and machine learning stocks but don't want to spend more than $5? ...
- Rekor Systems Inc. ...
- Nerdy Inc. ...
- FiscalNote Holdings Inc. ...
- Ideanomics Inc. ...
- BigBear.ai Holdings Inc. ...
- Duos Technologies Group Inc.
What are the 10 best stocks to buy right now? ›
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Company (ticker) | Analysts' consensus recommendation score | Analysts' consensus recommendation |
---|
ServiceNow (NOW) | 1.49 | Strong Buy |
Assurant (AIZ) | 1.50 | Strong Buy |
Howmet Aerospace (HWM) | 1.50 | Strong Buy |
Insulet (PODD) | 1.50 | Strong Buy |
21 more rows
Which is the best AI model for stock prediction? ›
Comparison
S. No. | Tool Name | Uses |
---|
1 | EquBot | Analyze, Strategize |
2 | Trade Ideas | Scan, Identify |
3 | TrendSpider | Chart, Analyze |
4 | Tradier | Trade, Connect |
6 more rowsJun 4, 2024
How high will C3 AI stock go? ›
Average Price Target
Based on 11 Wall Street analysts offering 12 month price targets for C3ai in the last 3 months. The average price target is $32.33 with a high forecast of $40.00 and a low forecast of $23.00. The average price target represents a 13.92% change from the last price of $28.38.
What is the best AI ETF? ›
Best AI ETFs by one-year performance
Company | Performance (Year) |
---|
QRAFT AI Enhanced U.S. Large Cap Momentum ETF (AMOM) | 33.51% |
Invesco AI and Next Gen Software ETF (IGPT) | 32.97% |
Invesco NASDAQ Internet ETF (PNQI) | 32.37% |
Neuberger Berman Disrupters ETF (NBDS) | 30.60% |
18 more rowsJul 1, 2024