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So far this year, tariff-induced volatility has pushed the Magnificent 7 stocks lower, including Meta Platforms (META), which is down 14.8%.
But investors needn’t worry: The tech titan has a clear plan for the coming year. Management emphasized during the Q4 earnings call that 2025 could be one of the company’s most defining years yet. Wall Street analysts say another strong year could help the stock bounce higher as much as 82%.
Let’s find out if this dip is a good opportunity to buy Meta stock now.
Meta Stock Is Back in the Spotlight
Meta ended 2024 with a strong performance and an ambitious vision for 2025, fueled by breakthroughs in artificial intelligence, momentum in augmented reality hardware, and a renewed emphasis on monetization and product expansion. Meta has returned to the spotlight, with a market capitalization that has again surpassed $1 trillion and strong financials to back it up. Total revenue in 2024 rose 22.4% to $164.5 billion, with earnings up 60% from the previous year.
Meta’s Family of Apps, which includes Facebook, Instagram, WhatsApp, and Threads, continued to deliver 21% revenue growth in the fourth quarter. Notably, WhatsApp now has over 100 million monthly users in the U.S., while Threads has more than 320 million monthly actives and over 1 million sign-ups per day. Additionally, Meta started testing ads on Threads in Q4, but monetization could take time to pick up. Meta remains primarily an advertising powerhouse, accounting for around 95% of its total revenue. Even in a challenging macroeconomic environment, Meta’s ad revenue increased by over 21.6% year-over-year, surpassing $160 billion in 2024.
Investors and analysts have previously questioned whether CEO Mark Zuckerberg’s metaverse obsession was a pricey distraction. But today, Meta is making a strong comeback in the metaverse. Meta’s Reality Labs segment, which includes its augmented and virtual reality initiatives, generated $2.1 billion in revenue, primarily from hardware sales. However, it continues to report operating losses, totaling $17.7 billion in 2024. Still, Zuckerberg remained optimistic, stating that 2025 will be the year when the visual and experiential quality of the metaverse significantly improves, paving the way for Quest and Horizon.
Furthermore, Meta is significantly expanding its infrastructure to support its AI-driven future. Zuckerberg boasted that Meta will bring 1 gigawatt of AI capacity online by 2025 and is building another AI data center large enough to cover a significant portion of Manhattan. This long-term investment demonstrates Meta’s belief that AI infrastructure will be one of its most valuable assets.
This could result in capital expenditures of around $60 billion to $65 billion by 2025. Meta plans to fund this expansion while increasing revenue. Despite its massive capital expenditures, Meta has a strong balance sheet and free cash flow reserves. In 2024, it had $77.8 billion in cash and marketable securities, with a debt of $28.8 billion. With a healthy free cash flow balance of $52.1 billion, it was able to pay dividends totaling $5.07 billion.
Recently, Meta also announced a 5% increase in its quarterly dividend to $0.525 per share. Meta is scheduled to release earnings for the first quarter of 2025 on April 30. Management expects an 8% to 15% year-over-year increase in revenue in Q1, with analysts estimating a 13.7% increase to $41.4 billion. For the full year 2025, analysts project Meta’s revenue to increase by 13.3%, followed by a 4.3% increase in earnings. Additionally, revenue and earnings are expected to increase by 13.3% and 14.6%, respectively, in 2026. Trading at 19x forward 2025 earnings, Meta is a reasonable AI stock to buy now.
What Is the Target Price for META Stock?
The average analyst target price for META is $703.81, representing a 41% increase from current levels. Furthermore, analysts have set a high price target of $935, implying that the stock could rise up to 88% over the next 12 months. Overall, Meta stock remains a “Strong Buy” on Wall Street. Of the 54 analysts covering the stock, 46 rate it a “Strong Buy,” two say it is a “Moderate Buy,” four rate it a “Hold,” and two say it is a “Strong Sell.”
The Bottom Line on META
From the explosion of generative AI and personal assistants to smart glasses, phenomenal social media growth, and a full-fledged push into AI infrastructure, 2025 is shaping up to be an exciting year for Meta. While the metaverse play is long-term and risky, the core ad business and AI initiatives are thriving. For long-term investors with a moderate risk tolerance, META stock appears to be a compelling buy on the dip.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
