FB Stock: Could Facebook, Inc. Become a $1.0-Trillion Company?

facebook stockFacebook Stock Could Hit $1.0 Trillion

Over the next five years, the prospects of Facebook, Inc. (NASDAQ:FB) have grown dramatically, opening FB stock to new heights. Facebook stock can’t be seen as a pure social media play anymore; it is fast approaching media conglomerate status.

After all, Facebook has recently become the best distribution route for online content. Its video and article platforms are driving so much traffic that Facebook is charging media companies for access. FB stock will continue to jump as more media companies cough up the dough to get a portion of Facebook’s 1.55 billion monthly users.

Then there’s the impact of virtual reality (VR) technology on Facebook stock. Facebook is set to release its first VR headset in 2016, which will compete directly with entertainment devices like Microsoft’s Xbox One and Sony’s PlayStation VR. Needless to say, VR is a huge tailwind for FB stock.

But the real heart of Facebook, the underlying strength of the company’s technology, is its artificial intelligence (AI) software. The development of algorithms to share content, which Facebook, Alphabet Inc (Google), and Amazon.com, Inc. are all working on, has fostered a new type of AI.

FB stock has already profited from the advent of AI, even though investors aren’t aware of it. I’m not talking about the kind of AI you see in movies, which terrorizes humanity by gaining control of nuclear missiles. Those are just movies. Instead, I’m talking about software that can recognize faces in the pictures you post and match them to your friends list.

Facebook has always relied on the strength of its AI algorithms, but now they’re becoming even more important. Facebook stock could catapult from new revenues, pushing the company’s valuation to $1.0 trillion over the next five to 10 years.

FB Stock Is Poised for Massive Growth

One of the reasons that Facebook stock is up 44.06% over the last 12 months is that its AI software is paying dividends. Although users can’t pinpoint why they like Facebook’s video platform, the volume of content is skyrocketing. The same goes for Facebook’s articles platform.

The Facebook algorithm offers up content that it thinks users will like. This are what makes it so valuable to FB stock; it learns our preferences. However, not all AI is created equal. Facebook is particularly good at composing this kind of software. (Source: “Facebook’s Virtual Assistant ‘M’ Is Super Smart. It’s Also Probably a Human,” Re/Code, November 3, 2015.)

Not only is Facebook dependent on AI-driven publishing, but also most of its future endeavors are directly in the AI sphere. For instance, take the new virtual assistant for Facebook Messenger named “M.” So far, the virtual assistant software was relegated to smartphone makers, but Facebook is now getting in on the action, too.

Android phones have Google Now, iPhones have Siri, and Windows phones have Cortana. Each of these virtual assistants can answer spoken queries, send messages, mark calendars, or place orders for the user. “M” is Facebook’s version of a virtual assistant.

Integrating Products to Boost Facebook Stock

Facebook stock is already getting a lift from the company’s growing revenue base. Unlike the technology stocks of the 1990s, FB stock has a good business model that churns out a profit. But Facebook is just getting started.

Early next year, Facebook will release the first generation of “Oculus Rift” headsets. Virtual reality gear is widely considered the next step in gaming and entertainment, and Facebook is paving the way with Oculus Rift.

If I were in charge of Facebook, I would make sure that M, the virtual assistant, was also available on Oculus Rift. I would sync all the features of Facebook.com, including the friends list, timeline feed, and messenger, and load them onto the VR gear.

Linking Facebook services to a piece of hardware would fundamentally transform the valuation of FB stock. Not only would Facebook stock profit by selling the Oculus headset and associated gear, but it would also benefit from content providers willing to pay even more to access the massive audience Facebook has bound to itself.

That’s what I would do if I was Mark Zuckerberg. And let’s face it, Zuckerberg is about 10-times smarter than me, so he’s probably already working on it. Keep an eye on FB stock, because the company could hit $1.0 trillion by 2020.

Stay in the loop. Follow Gaurav on Facebook and Twitter.