Meta Platforms' AI-Push to Drive Top-Line Growth: More Upside Ahead?

Meta Platforms META is infusing AI to improve content recommendations and ad ranking. This is helping the company keep users across its platform engaged. AI recommendations that deliver higher quality and more relevant content are expected to drive engagement. Vibes, META’s next-generation AI creation tools and content experience, is gaining traction. The company is using Meta AI (currently used by more than one billion people) to boost user experience. Business AI is also gaining traction with more than one billion active threads between people and businesses across its messaging platforms.

The ad business is benefiting from an improved AI ranking system. Annual run rate for META’s complete end-to-end AI-powered ad tools has passed $60 billion. In the third quarter of 2025, the average price per ad increased 10% year over year, benefiting from increased advertiser demand, largely driven by improved ad performance. Meta Platforms’ initiatives to unify different models into simpler, more general models, which drive both better performance and efficiency, bode well for the company’s top-line growth.

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. The company is also spending heavily on AI research, models, and infrastructure. META now expects 2025 capital spending between $70 billion and $72 billion compared with the previous guidance of $66-$72 billion range. For 2026, META expects significant growth in capital expenditure in dollar terms compared with 2025.

Meta Platforms expects fourth-quarter 2025 total revenues to be in the range of $56-59 billion. The Zacks Consensus Estimate for fourth-quarter 2025 revenues is pegged at $58.4 billion, indicating 20.7% growth from the figure reported in the year-ago quarter.

META Faces Tough Competition in Ad Space

Meta Platforms is facing tough competition from Alphabet and Amazon.

Alphabet’s Search business is benefiting from AI infusion. The company has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. AI Overviews and AI Mode are driving overall queries and commercial queries, thereby driving monetization opportunities. The addition of shopping capabilities in AI Mode is now helping people shop conversationally in Search. Alphabet has added new AI features in Search that help users build travel plans. This is driving GOOGL's advertising revenue growth.

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 climbed 11.3% in the trailing 12 months, underperforming the broader Zacks Computer and Technology sector’s return of 24.6%.

META’s Stock Performance

Meta Platforms stock is trading at a premium, with a forward 12-month price/sales of 7.22X compared with the broader sector’s 6.62X. META has a Value Score of C.

META Stock Trades at a Premium

The Zacks Consensus Estimate for fourth-quarter 2025 earnings is pegged at $8.16 per share, unchanged over the past 30 days, suggesting 1.75% year-over-year growth.
 

Meta Platforms, Inc. Price and Consensus

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

Meta Platforms currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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

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