Although Meta will likely spend a lot of cash on this new division, I think the move makes much more sense than the metaverse, and it may even be a profitable venture.

Using headsets for the metaverse may not be all that practical if you want to stay connected for multiple hours, and glasses may be easier to wear but they can also come with other challenges — namely, privacy. With AI, however, since it can be incorporated into any part of a business, such as enhancing Meta’s ad business and improving the user experience on its social media networks. There are many more viable ways for investments into AI to pay off for Meta in the long run.

A huge advantage for the company is its billions of monthly active users, which give it a lot of data it can train an AI model on. The biggest challenge for many companies making AI models is accessing the necessary data to make them effective and useful. With Meta having a plethora of data on its social media platforms, it has a big advantage over other tech companies in this regard. It may still need to spend money to access data, but its costs may be lower in comparison to other businesses that are developing chatbots and training AI.

Meta AI already reaches 1 billion users across all of the company’s applications each month. The company looks to be in a great starting point to build out its AI business, which can hopefully lead to significant profit growth later on.

Meta has some exciting potential in AI, but without a clearer strategy of what it plans to do with AI and how much of a payoff there will be from it, I’d suggest holding off on investing in the company just yet. My preference would be to see it wind down Reality Labs and just focus on this new division. Potentially having multiple cash-burning units in its operations could hurt its cash flow and profits for the foreseeable future.

AI is an intriguing growth opportunity, but investors may want to take a wait-and-see approach with the company for now, to make sure its strategy is sound and will pay off for the business in the long haul. For now, that isn’t evident, which is why I’d wait on the sidelines for the time being.

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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. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

Will Meta Platforms’ New Superintelligence Labs Division Send the Stock Soaring to New Heights? was originally published by The Motley Fool