This Wide-Moat AI Stock May Surprise You

Watch out for this investment opportunity as artificial intelligence meets the metaverse.

Andrew Willis 5 December, 2023 | 9:36AM
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The Morningstar Metaverse studio is a virtual creation featuring avatars of real editors and fictional correspondents (like Peter Fay).

Peter Fay: ChatGPT gave artificial intelligence a big boost in popularity. But that’s only one dimension of AI -  I couldn’t be in a virtual world like this if it wasn’t for the ability to generate these graphics…

…Let alone make the real-time computations to generate my face… “To be or not to be...” Is that the question? Or the ability to interpret my movements as I dance across our new Morningstar Canada metaverse studio.

AI has advanced to the point where, if you can think it, we can probably make it. And one company that is harnessing generative AI is also the world’s largest social network – Meta (META).

The company is now deploying artificial intelligence to support the virtual eyes and eyes of Mark Zuckerberg’s current vision of a digital world. From training computer models to better recognize physical objects to teaching AI to better filter out background noise, Meta may now have the technology it needs after massive investments in the metaverse. These developments come after Meta began using AI in its advertising strategy, which investors should keep an eye on in the near term, along with a few other businesses.

Ali Mogharabi: Meta has indeed been applying artificial intelligence technology to various businesses and products, which may increase engagement with its massive user base further. And advertisers are gaining confidence in Meta’s AI-powered campaign planning and measurement capabilities.

Since late 2022, investors also gained confidence in Meta stock as it has more than tripled and now trades around our fair value. Looking ahead, Meta’s revenue growth will be driven primarily by online advertising and increased spending in mobile, video, and social network ads. Maybe we’ll even see more advertising in the Metaverse in a few years, but their main business – social networks or media based on the ad model is doing fine.

Peter Fay: That advertising strategy might work well in the metaverse. But we got a long way to go - our sponsors in the studio today got a great deal on their spots, let me tell ya - but as artificial intelligence continues to integrate with metaverses, and those metaverses connect and well… you get the idea. So stay tuned… or is it logged in now? Either way, you’ll want to see what’s up next.

For Morningstar, I’m Peter Fay.


bulls Meta Bulls Say

  • With more users and usage time than any other social network, Meta provides the largest audience and the most valuable data for social network online advertising.
  • Meta’s ad revenue per user is growing, demonstrating the value that advertisers see in working with the firm.
  • The application of AI technology to Meta’s various offerings, along with the launch of VR products, will increase user engagement, driving further growth in advertising revenue.

bears Meta Bears Say

  • Meta is currently a one-trick pony and will be affected severely if online advertising no longer grows or if more advertising dollars shift to others like Google or Snapchat.
  • Despite rapid user growth, many of Meta’s customers may also belong to other social networks, such as Snapchat or TikTok, so the firm will continually have to fight to capture a user’s time and engagement with its properties.
  • Regulations could emerge that limit the application and collection of user and usage data, or restrict acquisitions, affecting data utilization and growth.


Editor's note: Images are courtesy of Meta Platforms, Inc.



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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Meta Platforms Inc Class A504.16 USD0.01Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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