In this piece, we will take a look at the ten leading social media companies in the artificial intelligence theme. If you want to skip our background to social media and artificial intelligence then take a look at 5 Leading Social Media Companies In The Artificial Intelligence Theme.
While most of 2023 has been marked by worries about the economy, amidst this uncertainty, artificial intelligence has provided investors and businesses with a new technology that has gotten everyone excited. While typically thought to lie in the domain of science fiction, AI is actually quite simple when compared to self functioning and thinking robots that most folks imagine it to be all about.
AI, in its simplest form, is a collection of mathematical formulas and equations that enable a computer to first process large volumes of data to determine patterns between variables. Then, when it is fed with a new data set, these patterns are used to make decisions and generate new output - with the latter also being dubbed as generative AI. Generative AI is the technology of 2023 due to its potential for applications across a wide array of industries and business processes.
In fact, the hype about AI and the availability of both software and hardware to meet its heavy duty computational requirements is one reason shares of Meta Platforms, Inc. (NASDAQ:META) have been one of the strongest performing this year after being one of the worst performing in 2022. 2022 was not a good year for most of the stock market and technology companies in particular since their shares were hit as interest rates and inflation jumped, creating worries about a tighter credit environment and dropping purchasing powers. This saw Meta's stock dip from its 2022 closing of $336 to a bottom of just $90.79, to mark a painful 73% drop that also pushed its founder Mark Zuckerberg several rungs down the ladder of the world's wealthiest.
Fast forward to 2023 and Meta seems to be a company reborn. The stock is up 143.67% year to date, and the latest closing price of $303 has seen it reverse most of 2022's losses. After all, a drop in the share price does not affect a company's fundamentals, and the fact still remains that Facebook is one of the largest social media networks in the world when it comes to user base. This provides it with a treasure trove of user data to help advertisers run their campaigns, and this potential is also a large reason why the shares appreciated in the recent age of AI.
The gist behind a bullish thesis for Meta Platforms, Inc. (NASDAQ:META) is that AI offers the firm unique and huge opportunities to utilize its user data to run marketing campaigns and deliver content. As we explained in our introduction to AI above, AI enables users to generate insights, and for Facebook, it suits the company since the large user base provides it with a vast amount of data and parameters that most companies do not have access to. Facebook is no stranger to AI either, since it has been using the technology for years for a variety of different purposes such as face recognition, contextual analysis of text, advertising, and business process improvement.
Naturally, AI itself has provided multiple catalysts to Meta's share price this year. One came in the form of a share price upgrade from analysts at UBS in June. They bumped up the target price to $335 from an earlier $300 and kept a Buy rating for the stock. The analysts outlined that Meta's decision to use an artificial intelligence chatbot across its products carried the potential to increase user engagement, the time spent on the platform, and the advertising revenues that are Meta's bread and butter. The note outlined that even if Facebook monetized 5% of search queries in its application, it could generate $7.5 billion in additional revenue for Meta, explaining that this aspect of revenue generation was not priced into the stock. Perhaps this is one reason Meta's shares have significantly appreciated on the stock market this year.
Another AI driven catalyst for Meta was the firm's earnings report for the second quarter of 2023. The data showed that the firm is piling in into AI investments, and at the earnings call, management shared:
So our growth in AI investments is really the thing that is driving the growth in our 2024 CapEx outlook. And I think there are a couple of components to that. There is both the core AI work, which powers our ranking and recommendation systems, which underpins both a lot of our content ranking and engagement growth, as well as the monetization work and that’s an area where we’re able to measure the ROI of our investments there, and we feel-good about the ROI of those investments and we want to continue investing appropriately to drive revenue growth. At the same time, being mindful of our desire to over the long-term decreased capital intensity. There is also another component, which is the next-generation AI efforts that we’ve talked about around advanced research and Gen AI and that’s a place where we’re already standing of training clusters and inference capacity, but we don’t know exactly what will need in 2024 since we don’t have any at-scale deployments yet of consumer business facing features and the scale of the adoption of those products is ultimately going to inform how much capacity we need.
But what about other firms that are also using AI to boost their business operation? Take a look below to find out some top social media companies in on the AI trend.
10 Leading Social Media Companies In The Artificial Intelligence Theme
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Our Methodology
To compile our list of the leading social media companies in artificial intelligence, we first made a list of all publicly traded social media companies. Then, they were selected based on their current and future plans with regard to AI, and the notable ones are listed below. This list is not exhaustive or all encompassing.
10 Leading Social Media Companies In The Artificial Intelligence Theme
Meta Platforms, Inc. (NASDAQ:META) is arguably the strongest social media player when it comes to artificial intelligence, as we've explained in detail above. The firm also recently launched a fresh pair of smart glasses, that have a portable form factor and augment real time viewing experience with augmented reality.
By the end of this year's second quarter, 225 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Meta Platforms, Inc. (NASDAQ:META). Out of these, the firm's largest shareholder is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital since it owns ten million shares that are worth $3 billion.
2. Tencent Holdings Limited (OTCMKTS:TCEHY)
Latest Market Capitalization: $365 billion
Tencent Holdings Limited (OTCMKTS:TCEHY) is a Chinese firm and a technology giant. It owns two of China's biggest social media platforms, namely WeChat and QQ. While it is also launching its business focused AI model Hunyuan, WeChat is well known for integrating AI into the service for facial recognition and security features.
NetEase, Inc. (NASDAQ:NTES) is a Chinese technology firm that offers gaming and other services which includes a music social platform that enables users to communicate with each other through music and create communities. The firm operates its NetEase Fuxi Lab which is developing AI and it is also rolling out AI to create new experiences in real time for users playing its games.
As of June 2023, 25 out of the 910 hedge funds polled by Insider Monkey owned the firm's shares. NetEase, Inc. (NASDAQ:NTES)'s biggest hedge fund investor is Panayotis Takis Sparaggis's Alkeon Capital Management due to a $210 million stake.
Pinterest, Inc. (NYSE:PINS) is a popular social media network that enables people to share images. The firm made an important AI related investment in September when it revealed that it is using AI to identify body types and make the platform exclusive for all.
During 2023's second quarter, 62 hedge funds out of the 910 tracked by Insider Monkey were Pinterest, Inc. (NYSE:PINS)'s investors. Paul Singer's Elliott Management is the largest shareholder among these since it owns $765 million worth of shares.
Snap Inc. (NYSE:SNAP) is another popular social media platform that enables users to be aware of each other's daily activities no matter what the distance. Its AI chatbot is powered by ChatGPT and allows users to strike up a conversation and seek recommendations.
29 out of the 910 hedge funds part of Insider Monkey's database had bought the firm's shares in Q2 2023. Snap Inc. (NYSE:SNAP)'s biggest hedge fund shareholder is Karthik Sarma's SRS Investment Management since it owns 52.6 million shares that are worth $623 million.
