Meta Platforms has become a battleground stock, and its massive artificial intelligence spending spree has become the biggest point of debate. Two research reports this week are offering fresh evidence that the billions upon billions of dollars that the Facebook and Instagram company is pouring into AI are producing tangible results. AI-driven ad gains The first way is showing up in Meta's advertising business, which accounts for over 95% of total revenue. Wall Street firm Bernstein said that AI is helping the company capture a larger share of digital ad dollars, calling the social media giant the "gold standard of AI-driven performance improvements." The analysts even said that Meta might be able to dethrone Google as the world's biggest ad platform. "Meta arguably has seen the largest impact from AI ad growth and is on track to surpass Google Search this year." Importantly, Meta is taking market share. Its advertising revenue increased 27% year over year through its latest second quarter reported on July 30, Bernstein modeled. Ad revenue growth in Google's network dropped 1% over the same period. That helped Meta gain two percentage points of market share, the largest year-over-year gain among the major digital ad platforms tracked by the firm. New digital agent The second comes from Meta's upcoming consumer-focused personal AI agent called Hatch. Bank of America believes it could eventually open a new revenue stream outside of ads. Analysts at BofA said that Meta is poised to benefit from a "significant long-term opportunity for consumer agent usage." The Information reported Monday that Hatch could feature a customizable dashboard for tools such as fitness tracking and travel planning. The agent is expected to run inside Instagram and WhatsApp and browse websites on a user's behalf. Meta is also considering a subscription tier for the service, including a premium option for higher usage limits priced as much as $199.99 per month. With billions of people already using Meta's social media platforms, Bank of America sees Meta's large global user base as "a meaningful advantage in driving new product adoption." At the same time, Hatch will have to prove how it's different from other AI incumbents like OpenAI's ChatGPT and Anthropic's Claude. Analysts, however, are optimistic that user adoption, while slow at first, could drive subscription revenues and enhance content and ad targeting. "The jury is still out on whether Meta can create meaningful new revenue streams to justify the hundreds of billions of dollars it is investing in AI," Club portfolio director Jeff Marks said. "New products should help the story, but we need to see them gain traction." META YTD mountain Meta Platforms YTD The progress of these developments matters because Meta is the worst-performing megacap tech stock this year. Shares are down more than 12% year to date as investors question how and when the company will make money on its AI investments. Alongside a disappointing earnings report in July, Meta maintained $145 billion as the high end of its full-year capital expenditures guidance, but raised the low end to $130 billion from $125 billion. The midpoint went to $137.5 billion, which exceeded the $134.6 billion expected. Bottom line Jim Cramer has argued that establishing a public cloud business is what Meta needs to do to show the Street that it has a plan to monetize extra computing power, if needed. It's the only hyperscaler out of the big four (Amazon, Alphabet, and Microsoft are the other three) without one. Nearly a month before releasing those second-quarter results, Meta CEO Mark Zuckerberg said a cloud was in the works. But it's been radio silence ever since. Multiple revenue streams are needed more than ever since Meta agreed last week to pay up to $18 billion to settle youth social media addiction claims with attorneys general from across the United States. While Jim called it a "big win" for the company, considering prolonged litigation could have cost over 10 times that, the deal does require Meta to put in additional safeguards. Any impact — no matter how small — to Meta's core ad business just introduces another level of uncertainty in a stock already on the ropes. (Jim Cramer's Charitable Trust is long META, GOOGL, MSFT, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. 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From CNBC Tech
By CNBC Tech
September 1, 2026
