Assuming Meta hits that number, the stock’s price/earnings-to-growth ratio (PEG) is only 1.3, which is inexpensive for a business as strong as Meta’s.

Now, let’s look deeper. Meta is one of the world’s prominent advertising companies, selling ads to billions of social media users across Facebook, Instagram, and WhatsApp. The company’s app family had 3.29 billion daily active users as of the third quarter, a 5% year-over-year increase.

Mid-single-digit user growth is impressive, considering that almost half the global population already uses these apps. Growth in users and ad prices are a potent combination for sustained revenue growth.

Meta is leaning heavily into AI, including open-sourcing its Llama AI model and implementing AI tools into its advertising operations. It built an entire business unit focused on AI, Reality Labs, which is still unprofitable due to the massive ongoing investments to accumulate computing resources.

Over time, that unit should turn profitable as revenue builds and these investments tail off. At that point, it could supercharge Meta Platforms’ broader earnings growth. So investors can buy Meta today for its already-compelling valuation proposition and hold for the eventual AI tailwinds that could continue driving earnings growth in the future.

Will Healy (Tesla): Most consumers know Tesla best for Elon Musk and his work to make the automaker the most successful EV company in history.

However, the business that shifts Tesla into a higher gear may be autonomous driving. The company just introduced its fully autonomous Cybercab to the market, and Musk forecasts production of these vehicles will reach 2 million units annually by 2026.

The Cybercab is just one application of its AI and robotics research that could revolutionize driving and other human activities. Its full self-driving (FSD) relies on its inference chip, while its Dojo system will power Tesla’s data centers. It also conducted robotics research that can handle repetitive or dangerous tasks, turning the automaker into a technology powerhouse.

A lot of hope rides on this technology, and investment groups like Cathie Wood’s ARK Invest believe Tesla will eventually derive most of its revenue from selling its robotaxi technology as a service. It speculates this technology could take the stock to $2,600 per share by 2029, a nearly ninefold gain from today’s levels.

For now, automobile-related sales accounted for 88% of Tesla’s $25 billion in the third quarter of 2024, a gain of 8% from year-ago levels. But efforts to reduce its operating expenses boosted the bottom line, so its $2.2 billion net income in the quarter surged 17% higher over the previous year.

It plans an unboxed manufacturing strategy for its robotaxis, increasing efficiency by building subassemblies in separate areas before putting them all together to build the final product.

Despite such efforts, the EV stock is down just under 30% from its 2021 highs. Still, optimism about its future has kept its price-to-earnings ratio at 82, and succeeding with robotaxis could mean it makes ARK Invest’s forecast for a nearly ninefold gain over the next five years a realistic aspiration.

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*Stock Advisor returns as of November 4, 2024

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Nvidia and Tesla. Justin Pope has no position in any of the stocks mentioned. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has a disclosure policy.

Missed Out on Nvidia? Buy These 3 AI Stocks. was originally published by The Motley Fool