Meta Platforms Just Upped the AI Ante—Here’s What Every Investor Needs to Know

Meta isn’t just playing the AI game—it’s rewriting the rules.

The social giant’s latest push into artificial intelligence goes beyond chatbots and image generators. We’re talking about infrastructure, algorithms, and scalability that could reshape how tech giants compete in the next decade.

Why It Matters for Your Portfolio

AI isn’t a side project for Meta. It’s core to everything from ad targeting to content moderation—and soon, maybe even your morning coffee order. The company’s deep investment in custom silicon and large-language models signals a pivot from ‘metaverse dreams’ to ‘AI realities.’ Expect ad efficiency boosts, engagement spikes, and maybe even a new revenue stream or two.

But Let’s Get Real

Sure, throwing billions at AI sounds impressive—until you remember this is the same company that thought ‘Horizon Worlds’ was a good idea. Wall Street’s watching to see if this spend translates into actual dollars, not just flashy keynote demos.

Bottom line: Meta’s AI bet could pay off huge… or become another expensive experiment filed under ‘innovation theater.’

Image source: Getty Images.

Meta Platforms is paying top dollar for AI talent and technology

In its AI investment efforts, Meta Platforms hasn't been afraid to whip out its checkbook. So far this year, the tech giant has been aggressively hiring the top talent in artificial intelligence research, offering individuals as much as $1 billion in total compensation.

The billions that Meta has spent locking down top AI talent pale in comparison to the hundreds of billions being committed toward the build-out of Meta's AI infrastructure, namely the construction of large data centers.

In the weeks since Wang's AI freeze rebuttal, further headlines signal that Meta has yet to retreat from the AI talent and technology arms race. On Aug. 26, President TRUMP spilled the beans on Meta's plans to build a $50 billion data center in Louisiana.

Just this week, Bloomberg reported that Jian Zhang, formerly's AI robotics chief, has left Apple for a new role at Meta Robotics Studio. Apple has garnered the reputation of being behind in AI, but hiring this experienced robotics executive could prove key in helping Meta gain ground in areas like AI hardware.

Meta's AI potential could go beyond its main business

Meta Platforms' continued heavy investment in AI comes just as OpenAI founder Sam Altman says the AI market is in a bubble, and as a recent study conducted by MIT suggests that 95% of organizations investing in AI projects have resulted in a zero return on investment.

Meta appears to be shaking off these "AI bubble" concerns. I'm starting to take a similar stance, at least in the case of this top AI contender. Mostly, because it's clear that Meta Platforms' AI strategy goes beyond using this technology to strengthen its Core business: digital advertising. The Facebook and Instagram parent plans to fully automate advertising on its social media platforms by late 2026.

It's unclear whether reaching full automation will marginally or materially enhance Meta's revenue and earnings, as these have already been boosted from prior rounds of AI implementation. This may explain why analysts expect an earnings slowdown for Meta next year. As of Sept. 4, estimates call for Meta's EPS to grow from $23.86 to $28 per share, or by 17.3% in 2025, but by only 6.8% in 2026, from $28 to $29.91 per share.

However, what if AI potential goes beyond advertising and hardware? What if AI software could one day become a significant contributor to the bottom line?

AI software success could kick the stock back into high gear

Last month, Meta announced it had entered a licensing deal with AI image generation start-up Midjourney. This could be the prelude to Meta launching a service similar to OpenAI's Sora. There hasn't been much news lately about the company's efforts to monetize its AI models, but the gradual pivot away from making its AI models open source suggests that's still on the agenda.

The MIT study may cast doubt on AI's real-life use case, but further advances in both generative AI technology and greater education could, in time, make AI a more useful tool for businesses. Hence, it still makes sense that Meta anticipates generating hundreds of billions, if not trillions, in revenue from AI by the 2030s, via revenue-sharing agreements, AI model subscriptions, and other sources outside of advertising.

Only time will tell, but if Meta eventually starts generating a larger portion of its overall revenue from AI software, not from advertising, this could convince the market to give its shares a substantial re-rating., another tech giant investing heavily in AI, currently trades for 36.5 times earnings, while Meta trades for just 26.7 times earnings.

In time, if AI software leads to higher-than-expected growth, this, coupled with a re-rating to the upside in terms of valuation, could produce substantial gains for Meta stock. This leaves me mulling over a purchase of this stock, as shares pull back from recent highs.