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A Bull Market May Be Coming: 2 AI Stocks to Buy Hand Over Fist Now

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A Bull Market May Be Coming: 2 AI Stocks to Buy Hand Over Fist Now

For the past few months, Wall Street has been divided on whether the year 2023 will end with a bull rally or a potential recession. However, popular opinion has slightly tipped in favor of the bullish camp, especially after the preliminary data from the Bureau of Economic Analysis indicated that U.S. real gross domestic product (real GDP, a measure of inflation-adjusted economic activity) grew at an annual rate of 4.9% in the third quarter — the fastest it has grown in the past two years.

In either case, artificial intelligence (AI) continues to be the dominant investment theme of 2023. Since AI is getting deeply embedded in our daily lives and is definitely not a passing trend, it makes sense for investors to opt for stocks with proven and already monetized technologies.

Here’s why Meta Platforms (META 2.56%) and Qualcomm (QCOM 3.42%) fit the bill and can prove to be attractive investments in the long run.

1. Meta Platforms

Shares of social media giant Meta Platforms have seen a meteoric rise of nearly 162% so far in 2023 — a remarkable feat after a pretty turbulent performance in 2022. CEO Mark Zuckerberg’s “year of efficiency” initiative (a focus on aggressive cost-cutting and reducing bureaucracy in 2023), has played a pivotal role in the company’s positive transformation.

Meta’s “family of apps” business segment, which includes social media apps such as Facebook, Instagram, WhatsApp, Messenger, and Threads, continues to be the cash cow and generate a solid stream of advertising revenue. In the third quarter, the segment reported $33.6 billion in advertising revenue, up 24% on a year-over-year basis. The operating income margin of this business was 51.9% in the third quarter, a robust improvement from a 34.3% margin in the same quarter of the prior year.

Meta has been leveraging recommendation AI technology to boost user engagement and monetization across its social media apps. These recommendation improvements have led to a 7% increase in time spent on Facebook and a 6% increase on Instagram in the third quarter. The company is also using AI and machine learning-powered tools, together called Meta Advantage, to help small businesses create impactful ads and enable advertisers to quickly understand the conversion potential of these ads.

Meta is now gearing up to focus on business AI (leveraging AI capabilities in business messaging) in 2024. The company aims to reduce labor costs by setting up business AI chatbots that can help customers with commerce and support activities. Besides bringing in a new revenue stream, business messaging can also help Meta reduce its overreliance on digital advertising.

However, all is not perfect for the company. Previously known as Facebook, Meta changed its name to reflect its interests beyond social media and advertising in other areas such as virtual- and mixed-reality hardware and the metaverse. While the company has invested billions of dollars in these businesses through its Reality Labs division, this business still remains a loss-making venture.

Although this challenge cannot be ignored, Meta also boasts of several advantages such as a broad customer base, ad-pricing power, improved financial health, and robust AI initiatives. In this context, even if the long-term future of Reality Labs is mired with uncertainty, Meta can be considered to be an attractive pick.

2. Qualcomm

Leading mobile chip giant Qualcomm reported mixed results in the fourth quarter of fiscal 2023 (ended Sept. 24). Although the company surpassed consensus revenue and earnings estimates, revenue was still down by 24% year over year to $8.6 billion and adjusted net income declined by 36% year over year to $2.3 billion.

However, things may soon get better in fiscal 2024 — as is evident by the company’s guidance for the first quarter of fiscal 2024 (ending Dec. 25). The company expects revenue to be in the range of $9.1 billion to $9.9 billion, implying a flat performance on a year-over-year basis. This is a significant improvement from the rapid revenue decline posted by the company in the past year. With the company seeing early signs of stabilization in demand for 3G, 4G, and 5G handsets globally, including China, the probability of meeting the guidance remains high.

Qualcomm has also been focusing on developing AI-focused chips for smartphones and Windows 11 personal computers (PCs). The company is making major strides in the on-device generative AI market and has introduced the Snapdragon 8 Gen 3 Neural Processing Unit (NPU) and Snapdragon X Elite CPU to run large language models (LLMs) locally on smartphones and PCs. As the first to release technology that can support LLM models based on billions of data parameters on local machines, Qualcomm has emerged as a leader in on-device generative AI technology for smartphones, PCs, and automobiles.

Qualcomm’s excessive revenue dependence on Apple has been a sore point in its investment thesis. The problem was exacerbated when it became clear that Apple was developing its own 5G chips — to the point where Qualcomm did not forecast any revenue from Apple in 2024. In this context, the recent renewal of the agreement between Qualcomm and Apple to supply Snapdragon 5G processors for smartphone launches in 2024, 2025, and 2026 can prove to be a solid positive for Qualcomm.

Hence, against the backdrop of stabilizing demand for consumer electronics, a potential turnaround in financials, dominance in on-device generative AI, and the renewal of the agreement with Apple, Qualcomm is a smart AI pick now.

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. Manali Bhade has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Meta Platforms, and Qualcomm. The Motley Fool has a disclosure policy.

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Individual + Team Stats: Hornets vs. Timberwolves

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CHARLOTTE HORNETS MINNESOTA TIMBERWOLVES You can follow us for future coverage by liking us on Facebook & following us on X: Facebook – All Hornets X – …

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What went wrong with ‘the Metaverse’? An insider’s postmortem

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What went wrong with 'the Metaverse'? An insider's postmortem


It’s now two years since Facebook changed its name to Meta, ushering in a brief but blazing enthusiasm over “the Metaverse”, a concept from science fiction that suddenly seemed to be the next inevitable leap in technology. For most people in tech, however, the term has since lost its luster, seemingly supplanted by any product with “artificial intelligence” attached to its description. 

But the true story of the Metaverse’s rise and fall in public awareness is much more complicated and interesting than simply being the short life cycle of a buzzword — it also reflects a collective failure of both imagination and understanding.  

Consider:

The forgotten novel

Ironically, many tech reporters discounted or even ignored the profound influence of Snow Crash on actual working technologists. The founders of Roblox and Epic (creator of Fortnite) among many other developers were directly inspired by the novel. Despite that, Neal Stephenson’s classic cyberpunk tale has often been depicted as if it were an obscure dystopian tome which merely coined the term. As opposed to what it actually did: describe the concept with a biblical specificity that thousands of developers have referenced in their virtual world projects — many of which have already become extremely popular.

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Snow Crash.

You can see this lack of clarity in many of the mass tech headlines attempting to describe the Metaverse in the wake of Facebook’s name change: 

In a widely shared “obituary” to the Metaverse, Business Insider’s Ed Zitron even compounded the confusion still further by inexplicably misattributing the concept to TRON, the original Disney movie from the 80s.

Had the media referenced Snow Crash far more accurately when the buzz began, they’d come away with a much better understanding of why so many technologists are excited by the Metaverse concept — and realize its early incarnation is already gaining strong user traction.  

Because in the book, the Metaverse is a vast, immersive virtual world that’s simultaneously accessible by millions of people through highly customizable avatars and powerful experience creation tools that are integrated with the offline world through its virtual economy and external technology. In other words, it’s more or less like Roblox and Fortnite — platforms with many tens of millions of active users. 

But then again, the tech media can’t be fully blamed for following Mark Zuckerberg’s lead.

Rather than create a vision for its Metaverse iterating on already successful platforms — Roblox’s 2020 IPO filing even describes itself as the metaverse — Meta’s executive leadership cobbled together a mishmash of disparate products. Most of which, such as remotely working in VR headsets, remain far from proven. According to an internal Blind survey, a majority of Zuckerberg’s own employees say he has not adequately explained what he means by the Metaverse even to them.

Grievous of all, Zuckerberg and his CTO Andrew Bosworth promoted a conception of the Metaverse in which the Quest headset was central. To do so, they had to overlook compelling evidence — raised by senior Microsoft researcher danah boyd at the time of the company acquiring Oculus in 2014 — that females have a high propensity to get nauseous using VR.

Meta Quest 3 comes out on October 10 for $500.
Meta Quest 3.

Contacted in late 2022 while writing Making a Metaverse That Matters, danah told me no one at Oculus or Meta followed up with her about the research questions she raised. Over the years, I have asked several senior Meta staffers (past and present) about this and have yet to receive an adequate reply. Unsurprisingly, Meta’s Quest 2 VR headset has an estimated install base of only about 20 million units, significantly smaller than the customer count of leading video game consoles. A product that tends to make half the population puke is not exactly destined for the mass market — let alone a reliable base for building the Metaverse. 

Ironically, Neal Stephenson himself has frequently insisted that virtual reality is absolutely not a prerequisite for the Metaverse, since flat screens display immersive virtual worlds just fine. But here again, the tech media instead ratified Meta’s flawed VR-centric vision by constantly illustrating articles about the Metaverse with photos of people happily donning headsets to access it — inadvertently setting up a straw man destined to soon go ablaze.

Duct-taped to yet another buzzword

Further sealing the Metaverse hype wave’s fate, it crested around the same time that Web3 and crypto were still enjoying their own euphoria period. This inevitably spawned the “cryptoverse” with platforms like Decentraland and The Sandbox. When the crypto crash came, it was easy to assume the Metaverse was also part of that fall.

But the cryptoverse platforms failed in the same way that other crypto schemes have gone awry: By offering a virtual world as a speculative opportunity, it primarily attracted crypto speculators, not virtual world enthusiasts. By October of 2022, Decentraland was only tracking 7,000 daily active users, game industry analyst Lars Doucet informed me

“Everybody who is still playing is basically just playing poker,” as Lars put it. “This seems to be a kind of recurring trend in dead-end crypto projects. Kind of an eerie rhyme with left-behind American cities where drugs come in and anyone who is left is strung out at a slot machine parlor or liquor store.”

All this occurred as the rise of generative AI birthed another, shinier buzzword — one that people not well-versed in immersive virtual worlds could better understand.

But as “the Metaverse” receded as a hype totem, a hilarious thing happened: Actual metaverse platforms continued growing. Roblox now counts over 300 million monthly active users, making its population nearly the size of the entire United States; Fortnite had its best usage day in 6 years. Meta continues plodding along but seems to finally be learning from its mistakes — for instance, launching a mobile version of its metaverse platform Horizon Worlds.  

Roblox leads the rise of user-generated content.
Roblox.

Into this mix, a new wave of metaverse platforms is preparing to launch, refreshingly led by seasoned, successful game developers: Raph Koster with Playable Worlds, Jenova Chen with his early, successful forays into metaverse experiences, and Everywhere, a metaverse platform lead developed by a veteran of the Grand Theft Auto franchise.

At some point, everyone in tech who co-signed the “death” of the Metaverse may notice this sustained growth. By then however, the term may no longer require much usage, just as the term “information superhighway” fell away as broadband Internet went mainstream.  

Wagner James Au is author of Making a Metaverse That Matters: From Snow Crash & Second Life to A Virtual World Worth Fighting For 

GamesBeat’s creed when covering the game industry is “where passion meets business.” What does this mean? We want to tell you how the news matters to you — not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.

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Social media blocks are “a suppression of an essential avenue for transparency”

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In this photo illustration the word censored is seen displayed on a smartphone with the logos of social networks Facebook, WhatsApp and YouTube in the background.

Once praised as the defining feature of the internet, the ability to connect with physically distant people is something that governments have recently been seemingly intent on restricting. Authorities have been increasingly pulling the plug, putting over 4 billion people in the shadows in the first half of 2023 alone

Social media platforms are often the first means of communication to be restricted. Surfshark, one of the most popular VPN services, counted at least 50 countries guilty of having curbed these websites and apps during periods of political turmoil such as protests, elections, or military activity.

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