Artificial intelligence (AI) has emerged as a force to be reckoned with in the modern economy, changing the lives of people around the world. Unsurprisingly, AI has also become a major investment trend, piqued by the interest of both veteran and new investors.
While several companies currently boast cutting-edge AI-powered technologies and solutions, it is also important for investors to consider other aspects such as market share, competitive advantage, and business scalability. is.companies such as Palantir (NYSE:PLTR) and meta platform (NASDAQ:Meta) Seems to fit the bill.
If all goes well, these companies can deliver extraordinary returns and help patient investors build wealth that lasts for generations. Here's why:
Palantir
Palantir Technologies, a leading data mining software and machine learning specialist, has seen a significant increase in its stock price over the last month. Shares have risen nearly 40% since the company released its fourth quarter earnings report on February 5th.
Once known primarily for helping government agencies thwart terrorist plots, Palantir's commercial arm is now in the spotlight. Government business currently accounts for 53% of Palantir's total revenue, but the revenue mix is increasingly shifting to the commercial sector. The transition is expected to increase Palantir's profit margins, as private customers have more pricing flexibility and lower regulatory hurdles than government customers. Palantir differentiates itself from competitors and builds strong relationships with customers by focusing on developing industry-specific solutions and targeting key sectors such as government, healthcare, pharmaceuticals, banking, and automotive. It is now also possible to This has allowed the company to secure a stable customer base.
Palantir is also experiencing steady growth across its customer base thanks to the rapid adoption of its recently launched generative artificial intelligence-powered software suite called AIP (Artificial Intelligence Platform). The company has chosen an effective go-to-market strategy centered around a bootcamp approach so that existing and future customers can quickly understand the capabilities of his AIP. This accelerated sales cycles and successfully turned engagements into profitable partnerships.
Considering the favorable revenue mix trends, established customer relationships, and success of the AIP platform, Palantir appears to be a wise long-term investment.
meta platform
Meta Platforms, the owner of the highly popular social media platforms Facebook, Instagram, and WhatsApp, has undergone an impressive turnaround, with its stock soaring an incredible 450% from its November 2022 lows. The company's efforts to leverage AI technology to improve user engagement and ad targeting and control costs contributed to this resurgence.
According to Magna, digital ad spending is expected to reach $913 billion in 2024, up 7.2% year over year, mainly due to improving economic conditions, lower inflation rates, and major events such as the U.S. election and European soccer. . Meta will particularly benefit from the increased demand for digital pure play (DPP) ad formats such as search ads, e-commerce ads, social media ads, and short-form video ads in 2024.
In addition to long-term tailwinds in the digital advertising space, Meta also benefits from its superior customer reach. With 3.2 billion people using at least one social media platform every day (almost 40% of the world's population), Meta has a strong position in the digital advertising market. The company's short-form video format, Reels, helps drive engagement on both Instagram and Facebook. Reels ads are also likely to emerge as a major revenue contributor in the coming years, as Reels are currently re-shared 3.5 billion times each day.
Meta's AI-driven recommendation system helps increase user engagement by suggesting more personalized content. Additionally, the company helps advertisers create targeted campaigns and measure ad performance with a portfolio of AI and ML-powered tools, including Advantage+, A/B testing, and the Conversions API. Masu. These AI efforts led to an increase in both ad impressions and average price per ad during the fourth quarter of fiscal 2023 (ending December 31, 2023), contributing to the company's strong financial performance.
There's no denying that Meta's Reality Labs division will continue to be in the red in 2023. Still, those losses are more than offset by the company's social media advertising business. Metaplatforms currently trades at 24.8 times estimated 2024 earnings. Although higher than historical valuations, it is still lower than the valuation multiples of the rest of the Magnificent Seven stocks. alphabet. Still, excluding NvidiaMeta stock has outperformed other Magnificent Seven stocks over the past year.
Therefore, based on its strong fundamentals and reasonable growth-adjusted valuation, Metaplatform appears to be an attractive large-cap technology candidate in 2024.
Should you invest $1,000 in Palantir Technologies right now?
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Manali Pradhan has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
“2 Stocks That Could Create Lasting Generational Wealth” was originally published by The Motley Fool.
