In less than eight months, Meta Platforms (NASDAQ:META) stock has gone from the most undervalued stock in America to the most overvalued.

On the surface it’s a study in failure. Its new name represents technology that is already a dead end. The company has been laying off people all year, and it’s still laying them off. It’s not growing, with revenue for the March quarter down 11% from December.

Despite this the stock’s value has nearly tripled. Meta’s November low was below $89. It now sells for almost $250.

Why, Meta, Why?

Investors buy stocks for a reason. We’re not stupid. People were dumping Meta last year and they’re buying it this year based on hope for the future. It’s why CEO Mark Zuckerberg changed the name.

The metaverse was supposed to be this mash-up of gaming, commerce and social networking that would transform how we live. It turned out to be Microsoft (NASDAQ:MSFT) BOB.

But Artificial Intelligence? AI is something else. Since the launch of ChatGPT, a generative AI program that can take vague input and deliver written output, a gold rush has begun the likes of which we haven’t seen since the Web was first being spun.

That you can use the whole Internet as input, to create stories, art, music, or software, is a sea change in productivity. Professionals of all kinds will see huge improvements in their work, or they’re going to be working at Starbucks (NASDAQ:SBUX).

This gives tech companies a huge stick with which to beat people, something Wall Street loves unless they’re the ones being whipped.

Meta has been using this stick to force people out or back into the office. Zuckerberg calls it his “year of efficiency.” He’s using the stick, building a sandbox for AI innovation, and Wall Street is cheering.

Can Meta Lose?

But why should Meta, which pioneered global social networking, win the AI revolution? Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) didn’t win social networking. IBM (NYSE:IBM) didn’t win the Internet. The PC revolution was won by start-ups, Apple (NASDAQ:AAPL) and Microsoft.

At the start of every technology revolution, investors buy the incumbents. Meta is the AT&T (NYSE:T) of AI. It has a network of scaled cloud data centers. In the developing world Meta IS the free Internet.

But while you’re piling into Meta stock, the company’s past is catching up with it. Meta just got hit with a $1.3 billion fine for violating Europe’s data privacy regime. The threat of the Internet splintering into regional networks is real.

Open source is building its own social networks, so Meta’s effort to copy Twitter would be like 68-year old me saying I’m going to date Taylor Swift.

Meta is having to dump formerly-big acquisitions like Giphy for a song. The company isn’t paying its content moderators in Africa. About 5% of its total revenue in the last year has gone to lawyers .

That first quarter jump in profits? Mostly Chinese retailers buying ads for their export markets.

The Bottom Line

Our Larry Ramer is right.

You don’t pay 30 times earnings or 5.5 times revenue for a maybe, just because you’re scared. You pay for certainty, for market dominance, for continuing growth on the top and bottom line.

Meta may find a place in AI. We’re still in the tool-making stage of AI, and Meta has money to build tools with. Meta’s network can bring the results to market.

But you don’t need big money or a big network to build a compelling tech product and scale it into something competitors can’t buy. Look at Tik-Tok.

On the date of publication, Dana Blankenhorn held long positions in AAPL, MSFT and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.