A Once-in-a-Lifetime Investment Opportunity: 1 Hot Artificial Intelligence (AI) Stock to Buy in April

The field of Artificial Intelligence (AI) is currently booming. Companies from all sectors are looking to capitalize on this technology and are investing heavily to gain a competitive advantage. This is also true in the social media space, where advertisers are looking to attract the right audience for a persona.

While the social media space is highly competitive, one company stands out from the rest.Meta Platformsfirms(NASDAQ resonance stock code: META)It has made great strides in all aspects of the AI field, as evidenced by its performance against the competition.

Let's take a deeper dive into why now is an opportune time to invest in Meta in the long term development of AI.

The profit machine is up and running.

One of the most intriguing aspects of Meta is how efficiently Koon's management runs the business. in 2023, Meta's revenues grew by 16% year-over-year to $135 billion. However, the company's operating income grew by 62% year-over-year to $46.7 billion.

By expanding its operating margins, Meta has also realized significant growth in its bottom line. Last year, the company generated $43 billion in free cash flow. With such a strong financial position, Meta is well positioned to invest its profits back into the business and return them to shareholders.

Investing in the future

On Meta's fourth-quarter earnings call in February, investors learned how the company deploys its cash pile. First, the company increased its stock purchase program by $50 billion. This is encouraging, because it means that management thinks Meta's stock is good value.

But perhaps even more exciting is the fact that the company has declared a quarterly dividend. Many high-growth tech companies aren't in a financial position to pay a dividend - or choose to reinvest profits in R&D or marketing strategies - and Meta's new dividend certainly sets the company apart from many of its peers, and is a nice sweetener for long-term shareholders.

Another way Meta utilizes cash flow is in the area of artificial intelligence. Like many companies, Meta relies heavily onINVISTACompany (NvidiaMeta's advanced graphics processing unit (GPU). However, Meta has been hinting for some time that it is investing in its own hardware. Earlier this month, Meta announced that an updated version of its training and reasoning chip, called MTIA, is now available.

This is important for several reasons. First, the autonomous chips will allow Meta to "control the entire stack" and reduce its reliance on third-party semiconductors. Additionally, given the knowledge base of data the company gathers from social media platforms Facebook, Instagram, and WhatsApp, these new chips allow Meta to improve its曏 recommendation models and ad campaigns through the power of generative AI.

Compelling valuations

Meta has a lot of competition in the social media space.AlphabetMeta is one of the company's main competitors, as it operates two of the world's most visited websites: YouTube and Google. However, in 2023, Alphabet's core advertising business grew by only 61 TP3T year-over-year, compared to Meta's 161 TP3T.

While Meta's price-to-sales ratio (P/S) of 10 is higher than many of its social media peers, the company's growth in the highly competitive and cyclical advertising space may justify the premium.

Also, considering Meta's price-to-earnings ratio of about 31, versus its 10-year average of 32, the stock may not be as expensive as it seems.

In total, I am optimistic about Meta's ambitions in the field of artificial intelligence - an investment that has yet to pay off. Artificial intelligence will be a long-term topic. But in my view, Meta is well-positioned to capitalize on the secular theme of AI and benefit from it throughout its business.

The dividend, the share buyback, the continued cash flow, and the compelling AI all make Meta stand out in the highly competitive AI space. I think it's a great time to snap up Meta stock and prepare for a long term hold.

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Alphabet executive Suzanne Frey is a board member of The Motley Fool. Randi Zuckerberg, former Facebook Market Development Armsmaster and Spokeswoman, and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool Board of Directors. Adam Spatacco works at Alphabet, Meta Platforms, and Nvidia, and The Motley Fool owns stock that recommends Alphabet, Meta Platforms, Nvidia, and Pinterest, and The Motley Fool has a disclosure policy.

A Once-in-a-Lifetime Investment Opportunity: 1 Hot Artificial Intelligence (AI) Stocks to Buy in April With Your Fist in Your Hand was originally published by The Motley Fool.