In 2025, generative AI models will become much more useful. That's because many of the companies involved with building these models have started to develop agentic AI. This is the next phase and basically involves AI agents acting as people.
While generative AI can be a useful tool on its own, these agents can do things autonomously, providing immense value to their users. One company leading the way in this field is Meta Platforms (META -1.16%), which powers its agents with its CICERO technology. This could be a true game changer for Meta and also open up some doors for interesting opportunities.
Meta's AI agents could drive more interaction on its platforms
Meta's CICERO displayed its worth by competing in a board game called Diplomacy. They describe this game as a combination of the board game Risk, the card game Poker, and the TV show Survivor. Clearly, there are some technical and strategic decisions that AI can excel at, but there are also negotiating and relationship tactics that AI models haven't been known to excel at.
However, CICERO excelled in this game and scored in the top 10% of participants across 40 games. This is a pretty big breakthrough, as it shows that AI models can be trained to reason with humans.
But how does this affect Meta?
Because Meta Platforms is a social media platform (through its Facebook, Instagram, WhatsApp, Threads, and Messenger apps), having an AI that understands humans is critical. One way Meta is attempting to do that is by creating AI influencers. Users having the ability to create AI influencers could boost interaction on the platform, which would, in turn, boost ad revenue for Meta.
The verdict is still out on whether this strategy will be successful, but don't be surprised to see more AI-generated content on Meta's platforms over the next year.
Furthermore, the technology that CICERO uses is already integrated within Meta's AI assistant, so the ability to reason can be tested through Meta AI, which is already available on its apps. By interacting with this platform, users are training Meta's Llama large language model (LLM) to be more accurate and complex, further boosting its usefulness.
Regardless, these innovations improve Meta's existing business, not add a ton of new functionality. So, is the stock worth owning in the current state of the business?
The stock is still attractive even without the addition of AI agents
Meta Platforms is already executing at a high level, as revenue rose 19% in Q3, with earnings per share (EPS) rising 37% year over year. That strength is expected to extend into 2025, with Wall Street analysts projecting 15% revenue growth next year.
Those are solid results and projections for a comapny of Meta's size. However, the stock really isn't all that expensive.
META PE Ratio data by YCharts
Meta isn't valued at that much premium over the broader market at 29 times trailing earnings and 24 times forward earnings. The S&P 500 (^GSPC 0.16%) currently trades at 24.7 times trailing earnings and 21.4 times forward earnings. Considering that other big tech comapnies that aren't growing nearly as fast as Meta (I'm looking at you, Microsoft (MSFT 0.52%) and Apple (AAPL 0.20%)) trade for a higher premium, it's safe to say that Meta is a solid stock to buy right now.
Will AI agents be a big deal for Meta? By themselves, I don't think so. However, their integration and use could further drive interaction with its platforms and ensure they don't get left behind by other social media sites. Meta is staying competitive in the AI race, which is critical in what will likely be an AI-driven future. Meta is still a great stock to own and buy right now, but not solely for its AI agents.
