Meta's AI-Driven Success: Stock Soars Amid Record-Breaking Streak and AI Investments

Meta stock eyes history as Facebook parent leaves Mag 7 rivals behind

Meta Platforms shares edged modestly lower in early Friday trading, but could extend an historic run of gains for the social media giant as it continues to outpace its peers despite concerns over the pace of AI investments and stretched valuations of meacap tech stocks. The Facebook parent (META) is one of only two co-called Magnificent 7 tech stocks trading in positive territory for the year, but its 21.6% gain in more than four times that of Amazon (AMZN) , which is up 4.6%, and well ahead of the 3.45% advance for the broader Nasdaq benchmark. On a one-year basis, Meta trails on the historic 83% gain for AI chipmaker Nvidia (NVDA) , but has added around $800 billion in value since May of 2024. Presidents Day Sale: Get Free access to TheStreet Pro for 31 days - Claim your offer today! Meta is also on the verge of notching its twentieth straight day of gain, extending a stretch that goes back to January 16, as investors appear to see the social media giant as the perhaps the first and most-successful megacap tech company to monetize at least some of its artificial intelligence investments. Last month, CEO Mark Zuckerberg said Meta's capex would rise to between $60 billion and $65 billion, a $32 billion increase from 2024 levels and well ahead of the Street's consensus forecast of around $51 billion. The group added that operating expenses would likely rise to between $114 billion and $119 billion, most of it focused on infrastructure. "I expect Meta AI will be the leading assistant serving more than 1 billion people, Llama 4 will become the leading state of the art model," Zuckerberg said. "This is a massive effort, and over the coming years it will drive our core products and business, unlock historic innovation, and extend American technology leadership." Meta betting big on Llama Llama 3, Meta's central AI model, is built on an open source principal similar to that of China-based DeepSeek, the AI startup that rattled the tech world with a cut-priced Chatbot that outperformed its rivals. It now boasts 700 million monthly active users and is targeting 1 billion-plus by year-end, and analysts see it helping to infuse profit growth across the whole of Meta's social media empire, which includes Facebook, Instagram, WhatsApp and the microblogging website Threads. Related: Analysts revisit Meta stock price targets after earnings surprise All that said, the 2025 outlook Meta delivered late last month, following a solid set of fourth quarter earnings, was curiously muted: the group declined to provide a full-year revenue forecast and said that first quarter sales would only meet Wall Street's $41.7 billion estimate at their very top end of their $39.5 billion to $41.8 billion range. Analysts see full-year revenues rising around 15% from 2024 levels, implying an overall topline of around $190 billion, with earnings rising 6.2% to $25.34 per share. But growth prospects for its ad sales, which will be helped by AI enhancements such as Advantage+ and a new machine learning system called Andromeda, run with Nvidia-made chips, continue to be a compelling longer-term story. AI expected to drive ad revenue gains "We are intrigued with the beginning development of AI engineering agents that can code and problem-solve like 'a good mid-level engineer'," said Benchmark analyst Mark Zgutowicz in a recent note. "Given higher-end AI engineering capacity adds this year and expected R&D deleverage, we await more discussion of the potential efficiencies these agents can bring to the R&D line, perhaps exiting this year," he added. CFRA analyst Angelo Zino, who carries a 'buy' rating with a $770 price target on Meta stock, is also bullish on the group's ad sales prospects thanks to its AI investments. Related: Analyst revisits Meta stock price target as Zuckerberg drops bombshell "While the motive is to improve the offering, we see paid content into AI interactions over time and note that Advantage+ is now at a $20B run rate," he said in a recent note. "Threads has over 320 million users and is testing ads, although we think monetization is more of a 2026 story, while we expect video growth and AI Agents to become major growth stories in the coming quarters/years," he added. More Tech Stocks: Meta shares were last marked 0.24% lower in premarket trading to indicate an opening bell price of $726.80 each. The stock has added around $280 billion in value since the stock's winning streak began on January 16, and now sit just 8.7% from reaching a $2 trillion valuation. Related: Veteran fund manager issues dire S&P 500 warning for 2025

Meta Platforms Stock Is Soaring. Is It Too Late to Buy? | The Motley Fool

Shares of Meta Platforms (META 1.11%) have delivered explosive returns to investors since bottoming out in 2022, and the stock continues to hit new highs. The stock surged recently after the company reported strong revenue and earnings performance in the fourth quarter. Despite the stock's monster run, it still offers upside. The shares are trading at a reasonable earnings multiple of 30, consistent with the S&P 500 (^GSPC -0.01%) average. Moreover, the latest earnings report revealed a few catalysts that are boosting investor confidence in the social media leader's growth prospects. Here are three reasons the stock is a buy. Big tech companies have accelerated their capital spending over the last year to support the build-out of technology infrastructure for artificial intelligence (AI). But not all are seeing improving earnings growth and return on capital employed. Consider that Microsoft and Meta Platforms have roughly doubled their capital expenditures over the last three years, but Microsoft reported earnings growth of just 10% year over year in the most recent quarter, while its return on capital dipped a few percentage points to 30%. Meanwhile, Meta Platforms increased its capital expenditures by 37% to $37 billion in 2024, but its earnings per share grew an impressive 60% year over year. This stellar performance increased its return on capital to a company-record 33.6% last year. Meta's improving returns on capital and robust earnings growth is boosting investor confidence in its AI strategy. Meta's primary means of generating revenue from its social media platforms is advertising. The company's revenue grew 22% in 2024, reaching $164 billion, and there are two ways AI could benefit its future growth. Meta AI is a personalized assistant that could reach more than 1 billion users this year. As the company continues to train its AI models, this assistant will get better at learning about a user's interests and increase their engagement with Meta's family of apps. This could have a significant impact on advertising. Last year, Meta and AI chip leader Nvidia teamed up to launch Andromeda, a machine learning system that is improving advertising performance. Andromeda filters through tens of millions of ads to find a small number that will be most relevant to someone browsing one of Meta's apps. Meta has a powerful growth engine working here. Meta AI is helping increase user engagement on one end, and on the other, Andromeda is making it easier for advertisers to connect with more than 3.3 billion daily active users. Another factor that is raising investor sentiment around Meta stock is the potential for a growing number of use cases with AI over the long term. One of those opportunities is Meta's Ray-Ban AI glasses that have reportedly sold more than 1 million, and CEO Mark Zuckerberg is optimistic about future sales. "This will be a defining year that determines if we're on a path toward many hundreds of millions, and eventually billions, of AI glasses, and glasses being the next computing platform like we've been talking about for some time, or if this is just going to be a longer grind," he said during the Q4 earnings call. It's possible Meta's Ray-Ban glasses might have hit their ceiling, considering how previous attempts have failed (e.g., Alphabet's Google Glass). But management is clearly not giving up on the potential for this to become a significant revenue contributor over time, and considering the popularity of Ray-Ban, these new glasses could find a growing audience. Importantly, this product won't hurt Meta's business if it fails, but if they take off, it would further validate Meta Platforms' AI strategy and fuel the stock higher.

Meta Stock Extends Its Record Winning Streak

With Monday's session, Meta shares have risen for 16 consecutive full sessions, the longest streak of any of the Magnificent Seven stocks. Put another way, Meta stock hasn't had a down day since Joe Biden was president. Meta stock has proven resilient to a slew of developments that have shaken other tech stocks in recent weeks. Shares rose nearly 2% the day Chinese start-up DeepSeek sparked a major AI stock sell-off; AI chipmaker Nvidia (NVDA) lost more than $600 billion of market value that day. Meta employees on Monday were preparing for the beginning of a round of performance-based layoffs that CEO Mark Zuckerberg announced last month. Executives have said they're aiming to let go of about 5% of the company's more than 74,000 employees. Meta dodged the DeepSeek rout in part because the social media company, which generates nearly all of its revenue from advertising, is seen by investors as more of a consumer of AI than a provider of it. It may also have helped that the DeepSeek model that shocked Wall Street was, like Meta's Llama, open-source. Shares rose 1% the day after Meta topped fourth-quarter earnings estimates, making it the only Magnificent Seven company to see its shares rise after reporting results. (Nvidia is the only Mag Seven company left to report.) On the company's earnings call with analysts, executives emphasized that both users and advertisers are increasingly turning to its AI products: Meta's AI-powered Advantage+ shopping service grew 70% in the quarter and reached a $20 billion annual revenue run rate, according to CFO Susan Li. Even the company's plan to increase its AI spending by about 50% this year -- the kind of aggressive spending that has spooked investors in tech giants like Microsoft (MSFT) and Alphabet (GOOG) -- hasn't dented Wall Street's enthusiasm for the stock.

Is Meta Platforms Stock Going to $935? 1 Wall Street Firm Thinks So. | The Motley Fool

Tigress Financial recently maintained the firm's "strong buy" rating on the shares but made a substantial adjustment in its price target. The firm now sees Meta stock going to $935, up from the previous estimate of $645. Can Meta stock climb another 30% from the current $720 share price? Investors are high on Meta's prospects. The company is earning great returns on its investments in artificial intelligence (AI), with revenue up 22% in 2024 to reach $164 billion. Earnings grew even faster, up 60%. With over 3.3 billion daily users across its family of apps, the company has a great opportunity to use AI to increase user engagement and grow ad revenue. Meta is making a big play on personalization. Its Meta AI assistant now has 700 million monthly active users, and it is expected to hit 1 billion this year. The stock is trading at 28 times 2025 earnings estimates, which is not expensive, but for the stock to hit the firm's price target, it would have to trade up to 37 times this year's earnings. But that's still within a range that could be considered "fair" for a company that is growing revenue at high double-digit rates and should maintain high margins over the long term. One thing that may prevent the stock from hitting the firm's price target is a lower rate of earnings growth, which could result from higher spending to support AI initiatives. Still, Meta's fourth-quarter earnings report went a long way to boost investor confidence about its AI roadmap and how these investments can benefit the business. Regardless of how the stock performs in the near term, Meta Platforms is well positioned to deliver solid returns for long-term investors.

Meta Stock's Record Winning Streak Is At Risk of Ending

Meta shares have risen for 15 consecutive full sessions, the longest streak of any of the Magnificent Seven stocks. Put another way, Meta stock hasn't had a down day since Joe Biden was president. Meta stock has proven resilient to a slew of developments that have shaken other tech stocks in recent weeks. Shares rose nearly 2% the day Chinese start-up DeepSeek sparked a major AI stock sell-off; AI chipmaker Nvidia (NVDA) lost more than $600 billion of market value that day. Meta employees on Monday were preparing for the beginning of a round of performance-based layoffs that CEO Mark Zuckerberg announced last month. Executives have said they're aiming to let go of about 5% of the company's more than 74,000 employees. Meta dodged the DeepSeek rout in part because the social media company, which generates nearly all of its revenue from advertising, is seen by investors as more of a consumer of AI than a provider of it. It may also have helped that the DeepSeek model that shocked Wall Street was, like Meta's Llama, open-source. Shares rose 1% the day after Meta topped fourth-quarter earnings estimates, making it the only Magnificent Seven company to see its shares rise after reporting results. (Nvidia is the only Mag Seven company left to report.) On the company's earnings call with analysts, executives emphasized that both users and advertisers are increasingly turning to its AI products: Meta's AI-powered Advantage+ shopping service grew 70% in the quarter and reached a $20 billion annual revenue run rate, according to CFO Susan Li.

Changing leadership in the US market as Meta reaches new highs

Thanks to an impressive run of 17 consecutive upward sessions, Meta has clearly distanced itself from its Magnificent Seven peers. After the crash of the metaverse in 2022, Mark Zuckerberg's group has successfully repositioned itself in AI. Even to the point of taking the lead? It's one of those statistics that financial journalists love. Meta has just racked up 17 consecutive sessions of gains. This is the longest streak for a Nasdaq stock since at least 1990, according to Bloomberg data. And Zonebourse analysts have found no record of such a streak for an American stock in the 21st century. This feat puts Meta ahead of the other members of the famous Magnificent 7 club, with a year-to-date rise of 23%, while the rest of the group's performances range from +6% (Amazon) to -19% (Tesla). From metaverse to mega-cap If Meta is now at the top of its game, its stock market performance over the last three years has not been a smooth ride. In 2022, rising interest rates drove down equity markets, particularly in tech, the segment of the stock market where valuations are highest. For Meta, the bill was even more staggering, withApple 's changes to its privacy policy on the one hand and, on the other, the sanctioning of its turn towards the metaverse - marked by the change of name that year - which then looked like going off the rails. Investments in metavers were substantial, and investors saw no monetization on the horizon. By the end of 2022, the stock had lost almost two-thirds of its value; the company was then worth... just over $300 billion. But the Group has bounced back. On the one hand, the arrival of ChatGPT in November 2022 will enable Meta to get out of its strategic rut and reposition itself in artificial intelligence. On the other hand, the difficulties of 2022 prompted the company to rationalize its costs; a fairly classic process for a company that had hitherto only experienced sales growth in excess of 20%. As a result, Mark Zuckerberg called 2023 "the year of efficiency". And Meta has been able to "deliver". Free cash flow reached a record $43 billion in 2023, with a cash conversion rate of 110%. As a result, Meta was able to announce in early 2024 the payment of the first dividend in its history, to the tune of $5 billion, in addition to major share buy-backs. Meta is now fully committed to AI and seems ideally positioned to take advantage of it. The investments made are already helping to develop the "historic" business since, thanks to AI tools, advertising is better targeted and results better measured. As a result, the colossal investments required in particular by the AI infrastructure are translating much more quickly into results than those of its major competitors. This explains why investors are less concerned about the $65 billion in CAPEX announced by Mark Zuckerberg, than about Google's $75 billion, Microsoft' s $80 billion or Amazon's $100 billion. What's more, Deepseek's arrival has validated Meta's choices, whose Llama model is open source. Another asset that will not be negligible for Meta's future is the fact that its boss has subtly (or not) moved closer to Donald Trump in recent months, which should enable the company to escape any new restrictive regulations in the United States. Or even abroad, since the American president is not very fond of European regulations aimed at American tech giants. AI without Nvidia? Since the launch of ChatGPT in November 2022, and thus the start of the AI trade on markets, it's mainly semiconductors that have benefited, in their capacity as the shovel and pick seller of this technological revolution. Nvidia, which designs the most advanced chips, has been at the forefront. Nvidia's share price has risen 11-fold since November 2022. This growth is essentially driven by results: sales have multiplied by more than 6, and net income by 14, compared to the fourth quarter of 2022. But since Deepseek's appearance, the tide has turned for semiconductors. The arrival of the Chinese model - whose performance is equivalent to Western models at lower development costs and using significantly less computing power - has called into question the idea that the AI race would be won by buying ever more chips for maximum computing power. In response, the AI trade seems to have shifted from hardware (semiconductors) to software (cloud, software), i.e. from companies building AI infrastructure to those deploying AI solutions. And Meta is seen as the best placed company in this respect. Thanks to its series of rises, the stock has already gained 23% since the start of the year, adding around...$300 billion to market capitalization.