Of all the Magnificent Seven stocks, Meta Platforms (NASDAQ:META | META Price Prediction) seems to have the AI narrative that’s shifted the most in the past few quarters. Undoubtedly, the company’s making up major ground in the AI race, but it seems like it doesn’t matter as much to the market anymore since the higher the CapEx, the longer the time a stock ought to be sent to the penalty box.
Indeed, I think the fear of the CapEx figure won’t last for all too long, especially with a company like Meta, which has been moving in that fast lane at a rate that might catch most analysts off guard.
Of course, with great AI CapEx comes great risk and, as far as the market’s concerned, no guarantee of decent ROIs. That said, when it comes to Meta, I’d argue that the firm’s AI strategy and showcase just keep getting better. As some of its AI rivals make more incremental jumps in AI, I view Meta as making gigantic leaps.
Meta’s selling Muse Spark and AI compute
Whether it can leap right into first place in the AI leaderboards with its brand-new Muse Spark 1.1 model, which scored highly on the benchmarks, remains the multi-trillion-dollar question. Either way, the case for paying Meta for its AI model, I think, only stands to get stronger over time, especially as the Superintelligence team hits hard in agentic AI.
Add the new Meta Compute business into the equation, and it seems like Meta’s AI monetization plan should make investors far more forgiving of the firm when it raises the bar on AI-related CapEx.
Like it or not, Meta is a hyperscaler now, and it might be the best one for the AI age, given its data centers are being built from the ground up with AI in mind. In other words, it’s a neocloud hyperscaler, and one that might have more of a moat over its peers once the great multi-year AI buildout puts a wave of new compute online.
Even if the AI ad business were to soften, Muse Spark and Meta Compute represent two massive monetization pillars that, in my opinion, can compete with the very best. And given Meta’s heavy focus on agentic AI (think their interest in acquiring Manus), I do think the company’s Superintelligence team might have the big AI product that changes the game entirely for the consumer and the enterprise.
Naturally, winning in AI and agents would make Meta’s smartglasses sell better as people gravitate away from screens and towards the next consumer hardware (likely a wearable) that replaces smartphones. With Muse Spark 1.1 closing the gap with models at the frontier, I do think the firm’s AI-first strategy could pay off significantly.
Don’t forget about AI ads and internal usage
It’s what Meta’s doing internally with next-generation AI, which, I think, could precede a push as it sells AI to others.
Whether we’re talking about leveling up the business of serving ads or the productivity benefits that only Mark Zuckerberg and his team can see (think AI coding, AI Zuck for mentorship, training agents to run internal workflows, training on internal data, and more), I do think that there’s a lot of behind-the-curtain value that could find its way into the numbers well before Muse Spark and Meta Compute really start generating off-the-charts growth.
Any way you look at it, Meta has a clean slate in the AI race, and that might help it move forward with immense speed. The first-mover advantage in AI could be unfathomably large, and given how quickly (and quietly) Meta is moving, it feels like the firm went from behind the pack to close to the front in just a few quarters. Yet, the stock hasn’t been rewarded because too many are overly focused on the spend.
When you consider how much AI innovation is happening behind the scenes (using its own workforce data, an AI version of Zuckerberg, and building data centers inside tents), it feels like the company isn’t just matching the speed of its hyperscaler rivals; it’s calling and raising the stakes. In any case, Meta is exploring the deeper potential applications of AI, and it wasn’t until recently that the firm saw itself as having enough extra compute to sell.
The bottom line
As the firm leverages powerful AI agents to automate, I do think that the firm will be getting that much closer to its startup roots, and given that agility matters in the AI race, I do think Meta is making a strong case for why it could win it all.
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