Meta Platforms' Ad Revenue Growth Picks Up: More Upside Ahead?

Meta Platforms META generates most of its revenues from advertising. In the third quarter of 2025, advertising revenues accounted for 98.6% of Family of Apps revenues and 97.7% of third-quarter total revenues. Advertising revenues jumped 25.6% year over year to $50.08 billion. The third-quarter 2025 advertising revenue growth was better than the second-quarter’s 21.5% year-over-year growth and the first-quarter’s 16.2% year-over-year growth.

Advertising revenues benefited from the total number of ad impressions served across Meta Platforms’ services, which increased 14%. Impression growth was healthy across all regions, driven by engagement and user growth, particularly on video surfaces. The average price per ad increased 10% year over year, benefiting from increased advertiser demand, largely driven by improved ad performance in the third quarter of 2025. 

Improvement in AI ranking systems is driving advertising revenues. Meta Platforms’ initiatives to unify different models into simpler, more general models, which drive both better performance and efficiency. Annual run rate for META’s completely end-to-end AI-powered ad tools has passed $60 billion at the end of the third quarter of 2025.

Meta Platforms and its advertising peers, Alphabet GOOGL and Amazon AMZN, are expected to absorb more than 50% of the projected global ad spending this year and 56.2% in 2026. Meta Platforms has a strong pipeline of ad supply opportunities on both Threads and WhatsApp Status over the long term. Ads are now running globally in Feed on Threads, and META plans to optimize the ad formats and performance before increasing supply. META’s Advantage+ creative suite is gaining traction, with the number of advertisers using at least one of its video generation features going up 20% on a sequential basis as adoption of image animation and video expansion continues to scale.

META Faces Tough Competition in Ad Space

Meta Platforms is facing tough competition from Alphabet and Amazon.

Alphabet in the third quarter of 2025 reported revenues of $74.18 billion, which increased 12.6% year over year and accounted for 85.2% of total revenues. Search and other revenues accounted for 76.3% of Google Advertising revenues. YouTube’s advertising revenues improved 15% year over year to $10.26 billion. The search business is benefiting from AI infusion. 

In the third quarter of 2025, Amazon’s advertising revenues increased 24% year over year to $17.7 billion. The company announced partnerships allowing advertisers to buy ad space on Netflix, Spotify, and SiriusXM Media through Amazon Ads, expanding its advertising reach beyond its own properties. The strong performance in advertising reflected successful AI-powered optimization of the platform and growing market share in digital advertising, providing a high-margin revenue stream that supports investments in other parts of the business.

META’s Share Price Performance, Valuation & Estimates

Meta Platforms shares have jumped 11.6% in the trailing 12 months, outperforming the broader Zacks Computer and Technology sector’s return of 27.9%.

META Stock's Performance

Meta Platforms stock is trading at a premium, with a forward 12-month price/sales of 6.96X compared with the broader sector’s 6.61X. META has a Value Score of C.

META Stock Trades at a Premium

The Zacks Consensus Estimate for 2025 earnings is pegged at $28.17 per share, up four cents over the past 30 days, suggesting 18.1% year-over-year growth.
 

Meta Platforms, Inc. Price and Consensus

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

Meta Platforms currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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