Facebook parent company Meta Platforms (META) is the focus of today’s IBD Stock of the Day. Meta stock has formed a consolidation pattern and is slowly recovering from a big slide in April, as investors debate the value of the social media giant’s artificial intelligence (AI) push.
On Thursday, Meta further detailed part of its generative AI strategy. The company unveiled new AI-powered tools for businesses on its WhatsApp messaging app at a conference in Brazil. Meta is looking to build AI agents that can help business users quickly respond to customer inquiries.
This is part of Meta’s effort to monetize the massively popular WhatsApp app, which the company acquired for $19 billion in 2014. Enabling messaging for businesses is a key focus, as Meta tries to find new revenue streams beyond its core social media platforms.
Meta CEO Mark Zuckerberg has pledged to invest heavily in optimizing the company’s data centers to support its AI vision. Investors are uneasy about this increased spending, which contributed to a lower-than-expected revenue forecast for the second quarter.
However, Zuckerberg sees potential for a “massive business” from providing AI-powered enterprise messaging and placing ads within AI chatbot interactions. The new tools unveiled on Thursday are aimed at helping businesses quickly respond to common customer questions using AI.
Meta stock has slowly been recovering since its late April earnings disappointment. The stock retook its 21-day moving average on May 8 and has maintained support at that level. Shares also overtook the 50-day moving average on June 5, a positive technical sign.
The stock has formed a consolidation pattern with a potential buy point at $531.49, the high mark before its post-earnings slide. Meta stock holds a strong Composite Rating of 98 out of a best-possible 99, meaning it tops nearly all other stocks in terms of key performance metrics and technical strength.
But the stock’s Accumulation/Distribution Rating of D-, on a scale of A+ to E, indicates heavy selling by institutions over the past 13 weeks. This is something investors will want to watch closely.
Overall, Meta’s AI push represents both an opportunity and a risk for the company and its investors. The new business messaging tools could open up new revenue streams, but the heavy spending on AI infrastructure is a concern. Investors will be closely watching how Meta’s AI strategy plays out in the coming quarters.
