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With a year-to-date gain of nearly 70%, Meta Platforms (META) is outperforming the Nasdaq Composite Index ($NASX) this year. The Facebook parent would have been the second-best performing “Magnificent 7” stock this year behind Nvidia (NVDA), just as it was last year, if not for the splendid rally in Tesla (TSLA) shares following the U.S. presidential election.
Life has now come full circle for Meta, whose revenues fell year over year in 2022. It was struggling to justify its position in the coveted Magnificent 7 group. It also faced flak for rising expenditures on the metaverse — a segment that’s lost billions of dollars over the last couple of years. However, Meta and its CEO Mark Zuckerberg proved naysayers wrong. The company delivered stellar top-line and bottom-line growth in both 2023 and the first nine months of 2024. In this article, we’ll look at Meta's 2025 forecast as artificial intelligence (AI) fuels the next leg of its growth.
Meta Is an AI Play
To begin with, Zuckerberg has been quite vocal about AI driving Meta’s growth in the short term while outlining the metaverse as a long-term growth driver. While many tech companies are still trying to figure out how to monetize their massive AI investments, Meta has been reaping the rewards from what its “years of AI investments."
During the third-quarter earnings call, Zuckerberg said, “we're seeing AI have a positive impact on nearly all aspects of our work from our core business engagement and monetization to our long-term road maps for new services and computing platforms.”
Providing some granularity, Zuckerberg said that Meta AI had crossed 500 million monthly active users and over a million advertisers used its AI tools to create more than 15 million ads in the previous month. The Meta CEO added that AI feeds have led to more time spent on Facebook and Instagram.
How High Can Meta Stock Go in 2025?
Meta Platform has a Street-high target price of $811 (via Rosenblatt Securities), which is 34% higher than its Dec. 26 closing price. The stock’s mean target price of $660.98 is just about 10% higher. Of the 51 analysts covering Meta stock, 43 rate it as a “Strong Buy” and 2 as a “Moderate Buy.” Four analysts rate Meta as a “Hold” while 2 rate it a “Strong Sell.”
Meta Stock 2025 Forecast
Meta will provide its official guidance for 2025 during its Q4 earnings call next year. So far, the company has provided some directionality, saying it expects its capex to be higher in 2025 amid continued investments in AI infrastructure.
While the company did not provide headcount guidance after having slashed its workforce by roughly 25%, it said that it is looking at strategic growth areas. In all likelihood, Meta’s headcount and by extension, its expenses, should increase in 2025 as the company will need to hire more people to support its growth. Consensus estimates call for Meta’s revenues to increase by 14.6% in 2025. While that is lower than the almost-21% topline growth it is expected to deliver this year, it is still a strong forecast.
Meta’s earnings per share (EPS) are expected to rise by just about 11% next year, which is below the growth that analysts are modeling for the year. However, Rosenblatt analyst Barton Crockett, who has named Meta as a top pick for the first half of 2025, believes that Meta’s earnings will grow in the high-20% range next year.
Meta’s Valuations Don’t Look Too Demanding
Meta trades at around 25x its expected earnings and Crockett finds it a value buy with a price-to-earnings-to-growth (PEG) multiple of just about 1x.
Donald Trump’s return to the White House is a mixed bag for Meta. Trump’s stance on the social media giant has been nuanced. The president-elect termed Facebook “an enemy of the people” earlier this year and said that it was as bad as TikTok. However, in a podcast in October, Trump said that he likes Zuckerberg “much better now.”
Meta might get to breathe a regulatory sigh of relief under a Trump administration as Trump is no fan of excessive regulations. That said, a possible crackdown on Chinese imports under a Trump presidency is a risk for Meta, as Chinese advertisers trying to reach Western audiences have helped drive Meta's growth in recent quarters.
Overall, I find Meta’s valuations reasonable at these levels, and while the stock might not give the kind of returns we saw in 2023 and 2024, it still has some heat left for 2025.
