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Key Takeaways:
- Analysts expect Meta to report revenue growth of 15% and earnings growth of 13% in the second quarter, driven by the strong integration of AI across its advertising and recommendation systems.
- The social media giant is accelerating its investments in artificial intelligence while positioning itself as a leader in personal AI assistants and next-generation computing platforms.
- Our valuation model, based on analysts’ estimates, forecasts that META stock could deliver an annualized return of 5.8% over the next 2.4 years.
Meta Platforms (META) is expected to report its second-quarter results tomorrow, following notable progress in artificial intelligence integration and growth in platform engagement.
Analysts covering META stock expect revenue to increase by 15% year over year to $44.79 billion while earnings are forecast to grow by 13.5% to $5.86 per share.
The social media and metaverse leader has demonstrated strong execution across its dual vision of building artificial general intelligence and developing the next computing platform through AR/VR technologies.
Meta has beaten revenue and earnings estimates in each of the last five quarters. In fact, it crushed earnings estimates by 23% in Q1, driving META stock higher by 4.3%.
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A Focus on Meta’s AI Plans
Meta is pursuing five major AI opportunities that represent significant long-term value creation potential: improved advertising, more engaging experiences, business messaging, Meta AI, and AI devices.
Meta’s advertising improvements through AI have already shown measurable results, with new recommendation models for Reels increasing conversion rates by 5% and 30% more advertisers utilizing AI creative tools.
Meta AI has achieved remarkable adoption, with almost 1 billion monthly active users across the company’s applications, establishing itself as a leading personal AI assistant that emphasizes personalization and voice conversations.
The Family of Apps continues to demonstrate strong engagement growth, with AI-driven recommendation improvements resulting in a 7% increase in time spent on Facebook and a 35% increase on Threads. Instagram Reels engagement has also surged by 24% due to algorithmic personalization.
Business messaging represents the next major revenue pillar, with WhatsApp reaching over 3 billion monthly active users and early AI business agent testing showing promising customer service automation capabilities.
Meta’s AI infrastructure investments include capacity expansion through increased capital expenditures, with the majority supporting core business operations while preparing for future AI workload demands.
Meta’s open-source approach through Llama models has generated substantial developer adoption, with 1.2 billion downloads demonstrating ecosystem leadership in foundation model development.
Reality Labs continues to progress with Ray-Ban Meta AI glasses, achieving tripled sales growth and over four times monthly active user expansion, validating the AI glasses market opportunity.
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Is META Stock a Buy Before Its Q2 Earnings?
Our valuation model estimates that Meta will benefit from sustained growth in AI-driven engagement while successfully monetizing its expanding user base throughout the forecast period.
The model projects META stock to appreciate from its current price of $718 to a target price of $823, representing a potential total return of 14.7% over the next 2.4 years.
This translates to an annualized return expectation of 5.8%, suggesting META stock offers moderate upside potential for investors seeking exposure to social media transformation and artificial intelligence integration trends.
Over the last 10 years, META stock has surged by over 600%, indicating an annual growth rate of nearly 23%.
Management’s strategic focus on building artificial general intelligence provides multiple pathways to success, with CEO Mark Zuckerberg noting that the company doesn’t need to succeed in all five AI opportunities to achieve strong returns on investment.
Meta’s efficiency improvements over recent years have strengthened its financial position to continue investing in key strategic priorities through various economic cycles while maintaining robust profitability.
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FAQs
1. Is META a Good Stock to Buy Now?
Of the 69 analysts covering META stock, 59 recommend “Buy”, eight recommend “Hold”, and two recommend “Sell”.
2. Can META Stock Reach $1,000?
The average 12-month target price for META stock is $755. Wall Street has a high META stock price target of $935, which means it’s unlikely the social media giant will touch $1,000 in the next year.
3. How much is META stock worth in 2025?
Today, META stock is valued at a market cap of $1.8 trillion.
4. Does META stock pay shareholders a dividend?
Yes, Meta is forecast to pay shareholders an annual dividend of $2.14 in 2025.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
