Facebook Push Into Video Allows Time To Catch Up On AI Applications – Investor’s Business Daily

Facebook (FB) is making the right choice in targeting video as a top priority, allowing it more time to catch up in the field of artificial intelligence, where it lags, says Richard Windsor, an analyst at Edison Investment Research.

Windsor, in an email note to clients, said that of three key areas of digital consumption gaming, search and video placing video first is the right move by Facebook

"This is because Facebook already has a lot of traction in this space and also because it is the least demanding in terms of requiring intelligent automation," he wrote.

Microsoft (MSFT), Alphabet (GOOGL) and Amazon (AMZN) have been investing heavily in artificial intelligence. Among the areas of AI applications are digital assistants for the home. Amazon has a big lead with its Echo device, while Alphabet has Google Home.

Microsoft has deep roots in artificial intelligence with its Cortana platform, available on mobile devices and PCs. This is also true of Apple (AAPL) with its Siri platform. While Siri is available on the iPhone and iPad, Apple has not yet signaled when it might introduce an in-home digital assistant.

IBD'S TAKE:Facebook and Amazon are two of the four closely watched FANG stocks, along with Netflix and Google's parent company, Alphabet. Internet stocks are expected tooutperform the broader marketin 2017.

Facebook on Tuesday made several announcements related to video, which could pose a threat to the YouTube business of Alphabet. The announcements included a Facebook app designed for watching Facebook videos on a television. The app will "roll out soon" to app stores for Apple TV, Amazon Fire TV and Samsung Smart TV, with more platforms to come," Facebook said in a blog post.

Facebook, in October, initially rolled out the ability for users to stream videos from Facebook to your TV. The announcement Tuesday expands this capability.

"With the launch of a TV app being just the latest move Facebook has made in video, it is increasingly clear that media consumption is Facebook's No. 1 priority for 2017," Windsor wrote.

While the Facebook TV app will initially be available on Amazon TV and Apple TV, Windsor says it will quickly spread to Microsoft Xbox, Sony (SNE) PlayStation and other streaming TV devices. He does not expect to find the app on Chromecast by Alphabet, "as Facebook's video aspirations are clearly a challenge to YouTube," he wrote.

The focus on video gives Facebook more time to develop its artificial intelligence technology.

"Wecontinue to see Facebook as the laggard in AI," Windsor wrote. "Targeting video is sensible as it gives it more time to improve its AI before having to apply it to more difficult tasks."

The fact that video is a fast-growing, but maturing, medium for digital advertising also means that the time to really address it is now, Windsor wrote. "The app on the TV is just the beginning and we would not be surprised to see this being followed up with premium content taking it into the realm of Netflix (NFLX), Hulu, YouTube and Amazon Prime."

Facebook, when it reported fourth-quarter earnings on Feb. 2 that blew past expectations, continued to benefit from a surge in advertiser demand, driven by newer ad formats such as video.

On the earnings conference call CEO Mark Zuckerberg said, "I see video as a megatrend on the same order as mobile. That's why we're going to keep putting video first across our family of apps and making it easier for people to capture and share video in new ways."

Facebook stock was down 0.3% to 133.44 onthe stock market today, and still in a buy zone from a breakout last month at 129.37, out of a cup-with-handle base.

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Facebook Push Into Video Allows Time To Catch Up On AI Applications - Investor's Business Daily