We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Meta Platforms (META) Banks on AI to Boost Growth Prospects
Read MoreHide Full Article
Meta Platforms (META - Free Report) is investing heavily in developing AI, which is supporting the build-up of the metaverse. AI will also help Meta drive revenue growth in its ad business, which is facing the worst downturn in the company’s history.
The ad revenue business is still Meta's primary income source. However, it is facing declining growth due to ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes is tough, and Meta expects these factors to hurt advertising growth in the fourth quarter of 2022.
Meta is also suffering from geopolitical tensions like the Russia-Ukraine war, which reduced its monthly active users across its family of apps, namely Facebook and Instagram. Also, rising inflation weakened digital advertising revenues.
The Zacks Rank #5 (Strong Sell) stock has tumbled 60.4% in the year-to-date period compared with the Zacks Internet – Software industry’s decline of 56.1%.
Meta is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse, and provides more immersive ways to interact and collaborate, bringing globalization to a whole new level. It is created by the use of virtual and augmented reality.
However, Meta’s financial plans to generate sufficient operating income from its Family of Apps business segment to fund the growth of its Reality Labs responsible for building the metaverse have taken a major hit. The company has been recently closing various long-term projects, which are burning a lot of cash.
In September, Meta announced that it discontinued its cryptocurrency wallet pilot project — Novi. This is a major setback for the company in developing the metaverse as an independent commercial platform as both the crypto and NFT markets crashed.
Although Meta’s short-term revenue growth looks bleak, the company is confident about its long-term prospects. It believes its investments in AI will help address the issues faced in its ad revenue business and solve the problems for building the metaverse.
Meta Banking on AI to Build Metaverse
Meta is investing in AI with the belief that it will generate positive ROI for the business as it helps address the newest trends in the social media market and decrease its security threats, which have impacted it for long.
The company’s investment in AI will help users navigate its different platforms seamlessly and more securely. It expects these features to boost its user growth and drive ad revenues, which will help fund metaverse growth.
Also, Meta is hell-bent on turning metaverse into its primary source of income. Per Bloomberg, the metaverse market will grow to about $140 billion by 2025. This will provide new revenue-generating opportunities for Meta, which is looking to invest $10 billion in the next 10 years to help in building the metaverse.
However, in order to make metaverse a reality, significant advancements are required in network latency, symmetrical bandwidth and overall speed of networks. The transition to the Metaverse is a collective effort, and Meta has been collaborating with fellow PyTorch foundation co-founders Microsoft (MSFT - Free Report) and Advanced Micro Devices (AMD - Free Report) to develop and architect the required networking system and AI models for the metaverse.
Microsoft is bringing new work and productivity tools to Meta Quest Pro and Meta Quest 2 next year. These include apps like Microsoft Windows 365 and Microsoft Teams and the ability to join a Teams meeting from inside Meta Horizons Workrooms, which will help create a seamless working experience in the metaverse.
AMD has collaborated with META as an ecosystem partner to build a Metaverse-ready radio access unit (RAN). AMD’s radio chip Xilinx Zynq UltraScale RFSoC will be utilized to develop multiple Evenstar radio units (RU) to expand 4G/5G mobile network infrastructure, which is crucial for the metaverse.
To build the metaverse, major breakthroughs need to be made in AI. Meta recently built the first speech-to-speech translation system for Hokkien, an oral language in China. This AI model can be used for other languages and will help in bridging the language barrier in the metaverse. This AI model is an expansion of Meta’s previous model that can translate 200 different languages and improve the quality of translations across its various technologies.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Meta Platforms (META) Banks on AI to Boost Growth Prospects
Meta Platforms (META - Free Report) is investing heavily in developing AI, which is supporting the build-up of the metaverse. AI will also help Meta drive revenue growth in its ad business, which is facing the worst downturn in the company’s history.
The ad revenue business is still Meta's primary income source. However, it is facing declining growth due to ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes is tough, and Meta expects these factors to hurt advertising growth in the fourth quarter of 2022.
Meta is also suffering from geopolitical tensions like the Russia-Ukraine war, which reduced its monthly active users across its family of apps, namely Facebook and Instagram. Also, rising inflation weakened digital advertising revenues.
The Zacks Rank #5 (Strong Sell) stock has tumbled 60.4% in the year-to-date period compared with the Zacks Internet – Software industry’s decline of 56.1%.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Meta is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse, and provides more immersive ways to interact and collaborate, bringing globalization to a whole new level. It is created by the use of virtual and augmented reality.
However, Meta’s financial plans to generate sufficient operating income from its Family of Apps business segment to fund the growth of its Reality Labs responsible for building the metaverse have taken a major hit. The company has been recently closing various long-term projects, which are burning a lot of cash.
In September, Meta announced that it discontinued its cryptocurrency wallet pilot project — Novi. This is a major setback for the company in developing the metaverse as an independent commercial platform as both the crypto and NFT markets crashed.
Although Meta’s short-term revenue growth looks bleak, the company is confident about its long-term prospects. It believes its investments in AI will help address the issues faced in its ad revenue business and solve the problems for building the metaverse.
Meta Banking on AI to Build Metaverse
Meta is investing in AI with the belief that it will generate positive ROI for the business as it helps address the newest trends in the social media market and decrease its security threats, which have impacted it for long.
The company’s investment in AI will help users navigate its different platforms seamlessly and more securely. It expects these features to boost its user growth and drive ad revenues, which will help fund metaverse growth.
Also, Meta is hell-bent on turning metaverse into its primary source of income. Per Bloomberg, the metaverse market will grow to about $140 billion by 2025. This will provide new revenue-generating opportunities for Meta, which is looking to invest $10 billion in the next 10 years to help in building the metaverse.
However, in order to make metaverse a reality, significant advancements are required in network latency, symmetrical bandwidth and overall speed of networks. The transition to the Metaverse is a collective effort, and Meta has been collaborating with fellow PyTorch foundation co-founders Microsoft (MSFT - Free Report) and Advanced Micro Devices (AMD - Free Report) to develop and architect the required networking system and AI models for the metaverse.
Microsoft is bringing new work and productivity tools to Meta Quest Pro and Meta Quest 2 next year. These include apps like Microsoft Windows 365 and Microsoft Teams and the ability to join a Teams meeting from inside Meta Horizons Workrooms, which will help create a seamless working experience in the metaverse.
AMD has collaborated with META as an ecosystem partner to build a Metaverse-ready radio access unit (RAN). AMD’s radio chip Xilinx Zynq UltraScale RFSoC will be utilized to develop multiple Evenstar radio units (RU) to expand 4G/5G mobile network infrastructure, which is crucial for the metaverse.
To build the metaverse, major breakthroughs need to be made in AI. Meta recently built the first speech-to-speech translation system for Hokkien, an oral language in China. This AI model can be used for other languages and will help in bridging the language barrier in the metaverse. This AI model is an expansion of Meta’s previous model that can translate 200 different languages and improve the quality of translations across its various technologies.