Meta Platforms Rises 7% in a Month: Buy, Sell or Hold the Stock?

Meta Platforms META shares have climbed 7.2% in the past month. Since the second-quarter 2025 results, reported on July 30, META shares have surged 11%, reflecting strong revenues and earnings growth as well as positive guidance. Meta Platforms expects total revenues between $47.5 billion and $50.5 billion for the third quarter of 2025, including 1% tailwind from favorable forex. 

The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $49.4 billion, suggesting 21.7% growth from the year-ago quarter’s reported figure. The consensus estimate for earnings is pegged at $6.69 per share, suggesting 15.3% growth from the figure reported in the year-ago quarter.
 

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

META’s shares have appreciated 31.8% year to date (YTD), outperforming the broader Zacks Computer & Technology sector, as well as its advertising peers, including Alphabet GOOGL, Amazon AMZN and Snap SNAP. Meta Platforms, Alphabet and Amazon are expected to absorb roughly 50% of the projected global ad spending by 2028.

Shares of Alphabet and Amazon have increased 3.6% and 1.3%, respectively, on a YTD basis. However, Snap shares dropped 27.8%. The broader sector appreciated 10.9% over the same timeframe.

META Stock’s YTD Performance

META shares are trading above the 50-day and 200-day moving averages, indicating a bullish trend.

META Shares Trade Above 50-Day and 200-Day SMAs

However, META shares are overvalued, as suggested by the Value Score of D. In terms of the forward 12-month Price/Sales (P/S), META is trading at 9.23X, a premium compared with the broader sector’s 6.62X. 

Meta Platforms shares are trading at a premium compared to Alphabet, Amazon and Snap. In terms of the forward 12-month P/S, Alphabet shares are trading at 6.63X, while Amazon is trading at 3.17X and Snap at 2.09X.

P/S Ratio (F12M)

META’s AI Push Boosts User Base, Advertisers

Meta Platforms’ focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger and Threads — is driving user engagement to boost ad revenues. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.48 billion daily users. Meta AI usage continues to increase, which is now available in more than 200 countries and territories. The company’s initiative to add updates that will help Meta AI deliver more personalized and relevant responses is expected to boost engagement. 

META’s new AI-powered recommendation model for ads drove roughly 5% more ad conversions on Instagram and 3% on Facebook. A meaningful percentage of ad revenues came from campaigns that used one of its Generative AI (Gen AI) features. Smaller advertisers with limited budgets are expected to benefit from these Gen AI features. Enhanced capabilities of Andromeda that powers the ads retrieval stage of META’s ads system have driven nearly 4% higher conversions on Facebook mobile Feed and Reels.

AI push is helping Meta Platforms’ offer content that is interesting and useful, eventually driving engagement. Improvement in content quality driven by META’s recommendation system has led to a 5% increase in time spent on Facebook and 6% on Instagram in the recently concluded second-quarter 2025. The launch of AI video editing tools across Meta AI and the new Edits app are noteworthy developments.

In the second quarter of 2025, video engagement improved with Instagram video time jumping more than 20% year-over-year globally. Video time spent on Facebook surged more than 20% year over year. Meta Platforms’ focus on further increasing the freshness of original posts is expected to drive user engagement.

Here’s Why You Should Hold META Stock Right Now

Meta Platforms is spending heavily on expanding AI infrastructure. For 2025, capital expenditure is expected to be between $66 billion and $72 billion (up from $64-$72 billion), driven by META’s Gen AI initiatives and core business. 

Operating expenses are expected in the $114-$118 billion range, with headcount expected to increase within infrastructure, monetization, Reality Labs, Gen AI, regulations and compliance. Regulatory concerns in the United States and Europe, along with tariffs and premium valuation, make the stock a risky bet.

Although these investments bode well for the company’s longer-term prospects, we believe sluggish monetization of platforms, such as Threads and Meta AI, is a concern. WhatsApp ads in Status are likely to earn a lower average price than Facebook or Instagram ads for the foreseeable future. Meta Platforms does not expect ads in Status to be a meaningful contributor to total impressions or revenue growth for the next few years. Ad revenues are expected to suffer from uncertainty related to higher tariffs and challenging macroeconomic conditions.

META currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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