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As a dominant player in technology and social media, Meta Platforms (META) is making significant strides in artificial intelligence (AI), infrastructure, and content. It is adapting to a rapidly changing industry by prioritizing innovation, expanding AI capabilities, and refocusing on its core platforms. With billions of daily active users across Facebook, Instagram, WhatsApp, Messenger, and Threads, Meta continues to generate strong advertising revenue. This success was reflected in its latest fourth-quarter earnings, which exceeded consensus estimates. Meta ended 2024 on a high note, with over 3.3 billion people engaging with its apps daily. CEO Mark Zuckerberg has highlighted 2025 as a “pivotal” year for the metaverse, signaling major developments ahead.
Currently valued at $1.8 trillion, Meta’s stock has risen 21% year-to-date, significantly outperforming the Nasdaq Composite Index’s ($NASX) 1.9% gain. Let’s find out if it is a good time to buy Meta stock.
2024 Was a Defining Year for Meta
Meta’s core social media platforms continue to expand in both user numbers and engagement. Facebook reported over 3 billion monthly actives, while WhatsApp surpassed 100 million monthly actives and strengthened its U.S. presence. Meanwhile, Instagram Reels and Threads are gaining traction, showcasing Meta’s ongoing leadership in the social media space. The company expects Threads to reach 1 billion people over the next several years.
The Family of Apps (FoA) segment, which includes all of Meta’s social media platforms, saw revenue growth of 21% in Q4 and 22% for the full year. The Reality Labs (RL) division, which focuses on augmented and virtual reality, reported a 1.1% revenue increase in Q4 and 13.1% growth for the year. Meta’s Q4 2024 revenue climbed to $48.4 billion, an increase of 21% year-over-year. Advertising revenue for its Family of Apps grew 21%, contributing 97% to total revenue. Diluted earnings surged 50.4% to $8.02 per share in Q4. For the full year, revenue rose 22.4% to $164.5 billion, with earnings up 60% compared to 2023.
Financially, Meta ended the year in a strong position, with $77.8 billion in cash and marketable securities alongside $28.8 billion in debt. The company generated $52.1 billion in free cash flow, enabling it to distribute $5.07 billion in dividends, showcasing its ability to return back to shareholders.
2025: A Year of Transformation
Meta enters 2025 with strong momentum, fueled by advances in AI, infrastructure expansion, and increased monetization opportunities. The company’s long-term competitive advantage will be dependent on the successful implementation of its AI assistant, AI-powered smart glasses, and the release of Llama 4. At the same time, sustained growth in its social media platforms and advertising business will be critical to ensuring financial stability. Mark Zuckerberg has stated that 2025 will be the turning point for AI at Meta.
A key focus for the year will be the release of Llama 4, Meta’s latest open-source AI model, which will be released in stages, similar to its predecessor, Llama 3. Rather than a single launch, Zuckerberg proposes a series of incremental updates, reinforcing Meta’s commitment to ongoing AI advancement. Meta is also aiming to make a breakthrough in AI engineering. By 2025, the company expects AI-powered coding agents to have the same skill level as mid-tier software engineers, potentially revolutionizing AI development and deployment. Regarding the future of smart glasses, Zuckerberg stated that Meta's Ray-Ban Meta AI glasses have gained traction, and 2025 will be a critical year in determining their long-term viability. The company is aiming for sales of 5 to 10 million units, which could establish them as a mainstream consumer tech product.
Despite increasing revenue in its Reality Labs (RL) division, the segment reported a $17.7 billion operating loss in 2024. Meta remains committed to the metaverse as a long-term investment, as user engagement for Quest and Horizon continues to grow. In 2025, the company plans to roll out major updates to improve the visual quality and functionality of its virtual environments, shedding more light on the Metaverse's commercial potential.
Additionally, Meta is investing heavily in infrastructure. CFO Susan Li stated on the earnings call that server investments will be the largest contributor to capital expenditure growth, supporting both AI and traditional computing requirements. Meta is also developing its own AI chips to reduce reliance on external suppliers, which could improve efficiency and reduce costs over time. These significant investments may put pressure on profit margins in the near future. Analysts project Meta’s earnings to grow by 5.7% in 2025, with an increase to 15% in 2026. With a forward earnings multiple of 28x for 2025, Meta is still a reasonable AI-driven stock to buy now.
What Does Wall Street Say About Meta Stock?
With earnings growing at a double-digit rate, analysts remain strongly bullish about the stock. Analysts at Tigress Financial, DBS, Argus Research, CMB International Securities, and many others reiterated their “Buy” ratings for the stock, citing the company’s strategic AI initiatives to drive long-term growth.
Among the 53 analysts covering the company, 45 give it a “Strong Buy” rating, two recommend a “Moderate Buy,” four suggest holding, and two rate it a “Strong Sell.” The average price target of $737.75 indicates potential 1.8% upside from current levels. Meanwhile, the high price target of $900 implies the stock could surge by as much as 24% over the next year.
The Verdict
Meta is making a calculated investment in AI, infrastructure, and social media expansion. Despite some short-term uncertainties, the company’s diverse revenue streams and strong financial position lay the groundwork for long-term success. While Meta remains a compelling long-term play, investors should keep an eye on how the company manages its competitive landscape, balancing aggressive innovation with sustainable growth.
