The idea that social media giant Meta Platforms (META) and test scores in rural Colombia could have any sort of connection might come as a surprise to a lot of people. But, reports note, there is indeed such a connection in play. It is not a positive connection, either, as Meta’s AI bots are starting to get in the way of Colombian students learning. But this impact meant precious little to shareholders, as shares blasted up over 12% in Thursday afternoon’s trading.
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For many Colombian students, noted one report, Meta is the first place that they come in contact with the entire concept of generative AI. And, perhaps not surprisingly, that same contact results in what teachers in Colombia call “…a surge of AI-generated homework and essays.” Interestingly, students were starting to turn in work that was well, well ahead of what they normally did. The arguments were surprisingly in-depth and included advanced vocabulary as well as points that clearly came from outside the presented coursework. This surge comes at the same time as a measurable drop-off in student exam performance, thus leading to a likely connection.
In fact, some educators in Colombia are sounding the alarm here that the education system was already under fire from low graduation rates, as well as low literacy rates. With generative AI stepping in and giving kids a terminal “easy mode” for homework, these rates are likely to drop even further. The homework no longer serves its intended purpose of helping kids learn, since it is effectively handed off to an AI.
A Kind-Of-Virtuous Cycle
Meanwhile, another report emerged that pointed out that advertising on Meta is going just fine. The latest financial results pointed to sales on the rise, clearing $47.5 billion and operating margins hitting 43%. And though capital expenditures are on the rise—projected to hit $69 billion over even analyst projections of $68 billion—the end result is likely still going to go well for Meta.
Analysts at Morningstar noted that the advertising business is not being used so much to sustain Meta as it is being used to drive AI development. And, in turn, that AI development is likely to help feed the advertising business as AI tools can be brought in to make the advertising business run better. So with AI feeding ads, and ads feeding AI development, Meta has hit on something like a virtuous cycle in the making.
Is Meta Platforms a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 43 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 39.67% rally in its share price over the past year, the average META price target of $847.49 per share implies 8.91% upside potential.
