Motley Fool: Considering Meta Platforms

You may know Meta Platforms (Nasdaq: META) for its social media services, but it’s also become a major player in artificial intelligence (AI). Meta AI, the company’s chatbot available across its Facebook, Instagram, WhatsApp and Messenger properties, has become a leader in generative AI.

As of the company’s third quarter, Meta AI had more than 500 million monthly active users. And in early October, Meta said that more than 1 million advertisers in the last month had used its generative AI tools to create more than 15 million ads.

There’s still a lot of uncertainty around generative AI, but having the biggest user base of any AI chatbot is an advantageous position. And Meta’s advertising business, with the help of its AI infrastructure, continues to deliver strong results. In the third quarter, its advertising revenue jumped 19% to $39.9 billion, making up nearly all the revenue for the company.

Some recent policy shifts have caused controversy, but Meta Platforms has been growing rapidly and delivering huge profit margins. Its stock is also reasonably priced at a recent price-to-earnings (P/E) ratio of 29.

(The Motley Fool owns shares of and recommends Meta Platforms. 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.)

My dumbest investment

My most regrettable investment moves happened years ago. I invested in Apple and Netflix. I held on for a while and made a decent amount on both, but I was new to investing and should have held on and never sold. Those two sales probably cost me a million dollars in profits I could have had. Don’t get me wrong – my accounts have done fine, but they could have done a lot better.

I learned to try not to pay attention to business news. The news is not built to give you thoughtful guidance; it is to scare you and get eyeballs on it. – P.K., online

The Fool responds: A lot of headlines are indeed designed to grab eyeballs, and many news stories are not very meaningful for long-term investors. For example, if a company’s factory burns down, its performance can take a hit, but it’s likely to recover and keep growing.

You were smart to invest in Apple and Netflix, as both have been phenomenal performers. The trick about selling is to ask yourself whether you believe your shares will keep growing and become more valuable over time. With great companies, investors who hang on through thick and thin for years – if not decades – are often richly rewarded.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)

Ask the Fool

Q. What are “defined-benefit” and “defined-contribution” retirement plans? – I.S., Grafton, Vermont

A. You may know them by different names. A pension, for example, is a defined-benefit plan because the amount you’ll receive from it is fixed in advance.

A 401(k) or 403(b) account, in contrast, is a defined-contribution plan because you determine the amount you (and perhaps your employer) contribute to it – by specifying that, say, 5% or 10% of your paycheck be routed to your 401(k) account.

While the amounts of each contribution are known, it’s not known how big your account will become over time, as much depends on the performance of the investments you choose.

Defined-benefit pensions were much more common in past decades, and defined-contribution plans are much more prevalent today. This has shifted risks and responsibilities: Employers bear more responsibility with defined-benefit plans, as they have to accumulate funds sufficient to meet their future obligations. With defined-contribution plans, it’s on the employee to decide how much to save and invest.

You can learn more about 401(k) plans and other retirement issues at Fool.com/retirement.

Q. How should I invest money I’m saving to buy a house in a few years? – R.D., Adrian, Michigan

A. Stocks are generally best for building wealth, but keep any money you’ll need within five (if not 10) years out of stocks. The stock market can be volatile, and you don’t want to have it crash right before you withdraw funds for your down payment.

Keep your short-term savings in safer places, such as high-yield savings accounts, money market accounts or certificates of deposit (CDs). You can find good rates for such accounts at Bankrate.com (under “Site map”) or at Fool.com/money (under “Banks”).