Meta Platforms Rises 17% Year to Date: Buy, Sell or Hold META Stock?

Meta Platforms META shares have appreciated 16.9% 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, Amazon and Snap have dropped 11.1%, 5.6% and 23.9%, respectively, on a YTD basis. The broader sector has climbed 0.1% over the same timeframe.

Meta Platforms’ focus on integrating artificial intelligence (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 3.43 billion daily users. Meta AI usage continues to increase, with roughly one billion monthly users globally. The company’s initiative to add updates that will help Meta AI deliver more personalized and relevant responses is expected to boost engagement.

META Stock’s 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 8.79X, a premium compared with the Zacks Internet Software industry’s 5.61X. 

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 6.03X, while Amazon is trading at 3.05X and Snap at 2.25X.

P/S Ratio (F12M)

So, what should investors do with the overvalued META Stocks? Is the company’s ad growth prospect enough to convince the investors? Let’s find out.

META Leverages AI to Boost Advertising Revenues

Meta Platforms focuses on improving advertisers’ return on ad spending. Its proprietary machine learning system, Andromeda, for retrieval in ad recommendation is powered by NVIDIA. The deployment of META’s deep neural network on the NVIDIA Grace Hopper Superchip across Instagram and Facebook applications has achieved more than 6% recall improvement to the retrieval system while delivering over 8% ad quality improvement on selected segments. 

Meta Platforms’ focus on making Meta AI the leading personal AI with a deepening emphasis on personalization, voice conversations, and entertainment is a key catalyst. The launch of Meta AI’s standalone app is a noteworthy development in this regard. 

The launch of the new Generative Ads Recommendation model for ads ranking that was used on Facebook Reels has increased conversion rates by 5%. Meta Platforms also saw 30% more advertisers using AI creative tools. Improvements in META’s recommendation system have led to a 7% increase in time spent on Facebook, a 6% increase on Instagram, and a 35% increase on Threads over the past six months. At the end of the first quarter of 2025, Threads had more than 350 million monthly active users.

META’s growing focus on social commerce through Facebook, Instagram and WhatsApp is noteworthy. In first-quarter 2025, WhatsApp Business Platform, as well as Meta Verified subscriptions, contributed to deliver 34% year-over-year growth in Family of Apps other revenues, reaching $510 million.

META’s Estimate Revision Shows Downward Movement

The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $5.83 per share, down by a penny over the past 30 days, indicating a 12.98% year-over-year increase.
 

Meta Platforms, Inc. Price and Consensus

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

The consensus mark for 2025 earnings is pegged at $25.53 per share, down by four cents over the past 30 days, indicating a 7% increase over 2024’s reported figure.

Here’s Why You Should Hold META Stock Right Now

AI usage is making META a popular name among advertisers as well as users. The company is spending heavily on expanding AI infrastructure. For 2025, capital expenditure is expected to be between $64 billion and $72 billion, driven by META’s Gen AI initiatives and core business. 

Although these investments bode well for the company’s longer-term prospects, we believe the lack of monetization of new platforms, such as Threads and Meta AI, is a concern. Meta Platforms plans to focus on scaling and deepening engagements for Meta AI over 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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