Motley Fool Money - Meta Has Its Muse

Starting point is 00:00:01 Meta Muse is here, and Motley Fool in Gem's investing starts now. Welcome to Motley Fool in Gem's investing. I'm Travis Hoy. I'm joined today by Lou Whiteman and Rachel Warren. Guys, the big news of the day is that meta platforms introduced the Muse app. This is their new Muse Spark model, which is apparently pretty good because this app looks pretty good. Meta's been behind in kind of the consumer space and artificial intelligence lost a lot of that mind share to companies like Anthropic and obviously chat GPT. But this seemed like a pretty big announcement from them that they're really starting to take this seriously from a consumer side. Lou, I want to start with you.

Starting point is 00:00:46 Does this make them a real player in AI consumer products again? I'm just so excited that my dream of an imaginary friend is not over, right? That someone is taking this seriously. And look, give credit where due, right? Meta was never going to win the enterprise. There is no way that people are going to dump clawed. for the Facebook guys. All right, I'm sorry.

Starting point is 00:01:09 Maybe that's too harsh, but I think it's true. So where's meta strength? It's into consumer. So I appreciate them focusing on the consumer. I don't know, though, if that's a good idea. For one, I feel like we've been hearing about this forever. And the results have always been underwhelming. And maybe this time is different.

Starting point is 00:01:28 Maybe the technology will improve. But it's going to have to be insanely good for people to pay for it. And at the end of the day, Meta is a for-profit business and they need to be able to pay for it. I get why they're going for the consumer here. I don't think this is going to pay for all those data centers. They're building. Rachel, what's your take on this?

Starting point is 00:01:48 And I think the framing that I want from an investment angle is, is this the kind of thing that is going to fundamentally change the way that we particularly shop? Because it seems like that's what a lot of these outcomes potentially were, the things that they demoed was, hey, you can just talk to it and say, hey, change my flight to tomorrow or buy me some groceries based on this Instagram reel that I saw. Is that possibly something that's going to be mass adopted? And we're just going to be shopping on Facebook products through Muse in, you know,

Starting point is 00:02:19 five or 10 years. I mean, I do think the way that consumers are shopping is changing. And I think we are seeing that at the very least consumers are more comfortable, letting some of these models and agents at least complete part of the process for them, even if they want the ability as the human to have the final say, whether it's a flight being booked or a reservation being made, whatever the case may be. And I think we're probably going to see more of that. But going back to Luce Point, I mean, meta has been behind in consumer AI for years.

Starting point is 00:02:47 I think Muse might be one of many necessary steps to shift that paradigm. You know, this model is essentially designed to handle a range of tasks. It doesn't just, you know, answer text prompts. And essentially it runs each agent inside an isolated environment called the Muse Secure VM. And this is this dedicated virtual machine, if you will, with its own browser. And essentially that means the agents can navigate web tools and use app connectors for services like Google Workspace, Spotify, OpenTable. Now, the monetization angle of this is kind of interesting, I do tend to think that this is not going to be something that moves the needle, at least not yet. But maybe it will be a precursor to something that does.

Starting point is 00:03:26 You know, they're testing a direct subscription model for news. There's going to be a free tier. They're going to have a $20 plan. there's going to be a $100 plan for really heavy users there. The final note I would make, and the kind of the core obstacle that I see for meta is the data privacy tradeoff, right? I mean, there's this idea if you're operating an effective background agent, there needs to be deep access to personal communications, calendars, financial tools. You know, meta has said that there's a separate agent called Sentinel that approves sensitive actions. It never views kind of that

Starting point is 00:03:55 really sensitive consumer data. But we saw internal tests that actually flagged data handling issues right up to launch week. So I think there's going to still be consumer hesitancy there. I think meta has a lot to prove for users to grant really this level of control to any single entity or model. We're going to talk a little bit more about this consumer AI in a moment, but Lou has meta done enough to be able to be that trusted place for consumers? Because what they're asking is not just to give you a whole bunch of data based on what you're looking at on Instagram or what you're posting on Facebook, but also, hey, let us connect to your email. Let us connect to your calendar. And like Rachel said, your financial information, that seems like another big leap. And it's a leap too far.

Starting point is 00:04:40 I mean, did you even notice in the demo? The AI seemingly knows the name of a person's kid, even though the kid's name wasn't in the prompt. It was like, we found this great stroller for Jonah or something like that. Meta needs to look in the mirror if they do not realize that they may not be the first choice when it comes to trusting. And let's be honest, even if they were. You don't have to opt in on a lot of these other companies. If there's going to be the imaginary friend, personal butler, shopping assistant, it's going to be Gemini and Siri. I keep coming back to this, but we underappreciate just what a good device the phone is and what a companion the phone is. The thing that is already on our phone is going to win here if there is a win.

Starting point is 00:05:21 And again, how good is it going to have to be for me to pay for this? Yeah, lots of questions from meta. We're going to talk about what the future of consumers using. AI because these are tools are getting better and better every day, but how is adoption actually going to play out more on that? No moment. Hey, Fidelity. What's it cost to invest with the Fidelity app?

Starting point is 00:05:46 Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm. That's music to my ears. I can only talk. Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Zero dollar commission does not apply to customers designated by Fidelity as a professional

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Starting point is 00:06:36 Fidelity brokerage services LLC, member NYSE, SIPC. Welcome back to Motley Pool Hidden Jems, Investing. All of these artificial intelligence companies are going deeper and deeper into our data, building agenetic models that are going to do things for us. But some companies are going to be disintermediated potentially. You know, we aren't going to need their services anymore. A company like Shopify was down almost 8% yesterday. So there is going to be business applications.

Starting point is 00:07:05 Not to mention the ROI and all of the trillions of dollars worth of investment that we've seen over the past few years. But Lou, as we think about this on the consumer side, I think the enterprise is a little bit different. You know, coding, we went from zero to 100 in like, what, three months? Consumers seems like a very different space. How quickly are we going to actually adopt some of these products? Because the agents are getting to be pretty interesting, pretty cool from all of these companies. but I don't know how much I'm going to be willing to connect my email, you know, my wife, my, my parents. The adoption curve on the consumer side is very different than it is with enterprises, seems.

Starting point is 00:07:43 It is. It is. And look, here, the investment advice up front, the way we're supposed to, right? Bet on the status quo and bet on the status quo to remain in place longer than you think. A little perspective here. Well, let's fire up the way back machine. The first credit card. Travis, you know what year came out? I actually know this answer because we talked about it on one of the Friday shows. Yeah, yeah, a guy forgot his wallet and came up the idea of just the diners club that you could do it. First Visa, the Bank of America card came along in 1958. I am not going to sit here and argue, but that's not better than paying cash.

Starting point is 00:08:18 I hate cash, okay? So this should be innovation that takes off. 60 years later, as of 2018, credit cards accounted for 18% of U.S. payments. Now, yes, e-commerce has kickstarted that into overdrive. 70 years later, we're up to 30% of payments today, which is to say mass adoption takes time. And I don't think, I mean, that's really, that is just a convenience thing, credit cards. Credit cards are easier than carrying cash.

Starting point is 00:08:49 I guess there's downsides, but you don't have to opt into things. You don't have to change your lifestyle. You don't have to trust companies that don't have a lot of trust. And that has taken that long. I believe all of this stuff is coming. I believe I will use some of them. And I think that they will like kind of become part of life over time. But again, I am taking the under on how quickly.

Starting point is 00:09:12 And I am not going to sell off Shopify because somebody's got a new trick that they think everyone's going to adopt every night. I always like the examples, the demos that they give in these products. releases because it tells you what they think people want to see. And the stroller example was fascinating to me because if you had kids, shopping for a stroller is one of the things that you go do with your partner. It is part of the process. You have tons of decisions to make. What do we like this size? Do we like how this feels? It's going to fit in our car. It is not something. For us, it was the cup holder. Yes. Yes. But all those little things. That is not something I'm going to have an agent do for me. But it is always fascinating to see what Silicon Valley thinks we want to see.

Starting point is 00:09:55 Rachel, when we think about this kind of technology, one of the things we've been talking about here on the show for quite a while is the difference between disruptive innovations and sustaining innovations. And it seems with this release in particular, it's sort of stuck in my mind that we now have these big tech companies that are leading in AI and they're the same companies that we're leading in the last generation. So maybe this is just the hammer that says this is a sustaining innovation and the disruption is not going to come from small startups. Yes, Anthropic and Open AI are out there. But, you know, they're well backed by these big tech companies and they kind of grew them themselves. So does that make sense as an investor that,

Starting point is 00:10:32 you know, what, like Lou said, the old companies are going to be the winners in the future too? I think so. And I think that's also because that's where we're seeing a lot of the technology coming from. And that's also where a lot of the consumer trust lies as well. I mean, I think we're talking about trying to get consumers to let autonomous buying agents handle a lot of sort of mundane transactions. And I think we're seeing that, you know, some of the things like tracking orders, checking inventory processing returns on the back end. That's something where it's very useful for Shopify. For a human individual user, things like going through your emails, summarizing some of your admin tasks, it was a worker. There are a lot of ways in which this technology is very useful. But those are real trust. bottleneck there. And I think that there's also a regulatory bottleneck, too. I think there's still a lot of uncertainty about how this is actually going to be applied in everyday life in the long term. So I do think as we see a lot of the dominant tech companies like meta, like alphabet, like Microsoft, you know, they're using their capital, their massive distribution networks to deploy the latest AI innovations as well as agents.

Starting point is 00:11:40 They're making good products more efficient. That is essentially the definition of a sustaining innovation. You know, going back to the example of Shopify, I think this is one of those companies that is solving a lot of the problems that merchants around the world continue to encounter. You know, they are continuing to leverage AI in their everyday processes behind the scenes on the back end, solving a lot of the problems that merchants are facing. And I think that that makes them a company that can sustain even in an age of innovation. There was a projection that came out from HubSpot that 95% of buyer journeys will be beginning inside an LLM chat within two years. So I do think that we are seeing an adoption curve among consumers, but I just don't think it's necessarily going to be quite as fast an adoption as some of the big tech companies are saying. It's interesting that the company that we have not mentioned here is Amazon. Amazon is the biggest e-commerce company, but they have not played nice.

Starting point is 00:12:42 with a lot of these agents and shopping tools in an AI age. So be interesting to see how they play this in the future. I know their Alexa keeps popping up when I open up the Amazon up and it's not necessarily, something I'm willing to use quite yet. Yeah. And that makes sense, doesn't it? I mean, Shumidi and Senna, I'll share the results. They are the advantage company with the current status quo.

Starting point is 00:13:03 So they are not going to look to disrupt. And again, all of your business plans or all of them that I've seen kind of count on Amazon does just kind of lean over and say, come on in. I think that should also factor into thoughts on the timetable for adoption. Yes, lots to play out, lots of investing implications. When we come back, we're going to talk about some huge advances in the world of medicine. You're listening to Motley Pool, Hidden Jemps, Investing. Introducing Fidelity Trader Plus, the next generation of advanced trading from Fidelity.

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Starting point is 00:15:31 Yeah. So the Alpha Genome Atlas, it takes the complexity of human DNA and it sort of computes the exact molecular impact of every possible change. The scientific community has understood for a long time that 2% of the genome codes for proteins remaining 98%. That is sort of like a control panel for switching genes on and off. And that 98% has actually largely been a mystery. So to solve this, Google DeepMind has utilized its alpha genome AI model to analyze sequences up to 1 million base pairs in a single pass. It's calculating essentially how individual mutations disrupt critical processes in the body like gene expression. And then it is. assigns each mutation a score to rank how harmful or influential a specific genetic change is likely to be.

Starting point is 00:16:20 So essentially, to break this down, human DNA is an incredibly long line. We're going to make it analogous to software code that runs in our bodies. And so this means that for a long time, scientists only understood a small portion of that code that physically builds our organs and our tissues and the other was a mystery. And this tool essentially ran every single possible typo that could ever happen in that mysterious 98% of the code. And what acts like a broken power switch that causes a disease, which typos are harmless, just to give you a bit of an analogy there. And then essentially compiled all of these answers into a giant searchable library

Starting point is 00:16:55 that's free for software developers, researchers. Now, there's a commercialization wave coming here. Pharmaceutical companies are soon going to have to license Atlas through Google Cloud to plug the database right into their drug discovery pipelines. But, I mean, we're already seeing early validation here. You have Memorial Sloan Kettering Cancer Center, Stanford University. They are actively using the Atlas to solve complex medical cases. One example, researchers actually used this AVI score to uncover an overlooked mutation responsible for a rare form of epilepsy.

Starting point is 00:17:26 So we're already seeing the ways in which this is so valuable for researchers, for pharmaceutical companies. I think this could be a really, really valuable tool. Lou, that sounds very cool. how investable is it or is this just one of these areas where the surplus ends up with consumers? We live healthier, better lives long term and all of this others. You know, this is a complicated space to be investing. Right. And I think it's impossible.

Starting point is 00:17:52 I don't think it is investable. And I'm not a bio researcher. Although maybe more tailwinds for Google Cloud. Maybe, maybe. But I've been to lean heavily on Eli Lilly CEO, David Ricks last year, who wasn't dismissive of AI, but was definitely trying to. hit the brakes on the hype. The body's complicated. It's great to map and understand the genome, but there are very few diseases caused by a single gene. Cystic fibrosis famously is chromosome 7, only chromosome 7. And yet we still struggle with that. Most things, it's interactions between

Starting point is 00:18:26 different things. This is a great starting point. But all this does is basically give researchers, you know, a head start at that first step, so maybe we do fewer dead ends. There's still a huge, huge amount of progress. One thing Rick's pointed out is, is that AI models speak English. They don't speak biology. And part of that is because humans don't speak biology. We still don't understand the language of biology. So we can't teach AI a language we don't understand. I think we'll get there in time, but these are incredibly complex problems. root for it because we all want to live healthy. And I do think that this is progress and I celebrate that. But as an investor, you're talking a decade or so, I think before there is anything coming

Starting point is 00:19:17 out of here just the nature of the science. So cheers to incremental progress, but do understand and don't just kind of load up on the account of some biotech because they say they're licensing this. That is not a good investment, even if we're making real progress. Yeah. I think You know, the takeaway from this was that hopefully this keeps continues to accelerate progress from a human health standpoint. Because if there is something positive that's coming up from AI as we talk about, you know, doom and gloom and, you know, consumer adoption and safety and all these kinds of things, it seems like there are some really positive things coming out of the world of AI and Space Labs today. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have four more recommendations for or against, so don't buy ourselves stocks based solely on what you're here. All personal finance content follows the Monly Fool's at a tour. standards and is not approved by advertisers. Advertisements are sponsored content and provided

Starting point is 00:20:09 for informational purposes only. To see our full advertising disclosure, please check out our show notes. We're Lou Whiteman, Rachel Warren, and Christy Waterworth by In The Glass. I'm Travis Helium. Thanks for listening. We'll see you here tomorrow.

Motley Fool Money - Meta Has Its Muse

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