MENLO PARK / LONDON (IT BOLTWISE) – Meta, formerly Facebook, is experiencing an impressive comeback on the stock market thanks to artificial intelligence. After a dramatic price drop in 2022, the stock has recovered and investors are wondering whether the surge is justified. The group relies on AI and virtual reality to secure its technological leadership role. But there are also risks that should not be underestimated.
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Meta, the tech giant behind platforms like Facebook, Instagram and WhatsApp, has recovered impressively after a difficult 2022. The company’s stock, which focuses heavily on artificial intelligence (AI) and virtual reality (VR), has gained over 500 percent since its low point in October 2022. This development raises the question of whether Meta is now at the peak of its power or whether the success story is just beginning.
A key part of Meta’s business model is digital advertising, which accounts for around 98 percent of revenue. The success lies in the precision of the targeting, made possible by the enormous database that Meta collects about the behavior of its users. Analysts praise the company for having one of the most efficient advertising systems in the world, based on a mix of data power, algorithms and AI.
To secure its technological leadership role, Meta is investing billions in artificial intelligence. A new data center in Texas specifically designed for AI applications is scheduled to be operational in 2028. These investments could further increase the efficiency of Meta’s advertising systems and redefine its core business. But relying on AI also poses risks, particularly with regard to data protection and regulatory challenges.
Meta is often in the sights of data protection authorities and consumer advocates. The handling of user data, especially with regard to training AI models, is viewed critically. There are also concerns about the protection of minors and the spread of disinformation. These challenges could limit Meta’s growth potential, especially if the EU further tightens its data protection and competition rules.
Overall, Meta remains a powerhouse with exceptional potential, but investors should be aware of the risks. The stock is not a bargain, and future growth depends heavily on whether WhatsApp’s new AI products and monetization bring in additional billions in sales. However, long-term investors could benefit from Meta’s innovative strength as long as the company does not lose sight of its social responsibility.
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