Meta Platforms, Inc. (formerly known as Facebook, Inc.), which was founded in 2004, is a leading American multinational technology company headquartered in Menlo Park, California, with around 75,900 employees. The company has offices in over 90 countries across North America, Europe, Middle East, Africa, Asia-Pacific, and Latin America. In addition, the company owns 27 data centers globally. Meta focuses on enhancing user engagement across its products and investing in next-generation technologies to enable seamless, immersive digital experiences.
The company operates through two principal divisions: Family of Apps (99.2% of Q2 25 revenue), including Facebook, Instagram, WhatsApp, Messenger, and Threads, which forms the core of its social networking and messaging platforms, enabling global communication, community building, and marketing activities for billions of users and businesses; and Reality Labs (0.8%), dedicated to developing cutting-edge technologies in virtual reality (VR), augmented reality (AR), and the broader metaverse. The company is geographically segmented into four regions namely: the US and Canada (38.4% of FY 24 revenue), Europe (23.3%), Asia-Pacific (27.4%), and the rest of the world (10.9%).
AI-aided advertising drives Q2 25 results
Meta released its Q2 25 results on July 30, 2025, posting robust results, with revenue up by 22% y/y, reaching $47.5bn, driven by 22% y/y growth in Family of Apps, 11% y/y growth in ad impressions, mainly due to Asia-Pacific region and engagement tailwinds on Facebook and Instagram, and 9% y/y increase average price per ad.
Operating income rose by 38% y/y to $20.4bn, with margins expanding by 500bp to 43% and net profit increased by 36% y/y to $18.3bn, on account of the decline in general and administrative expenses by 27% y/y, driven by lower legal-related costs. Following the earnings release, the stock price rose 10%.
Meta bets big in AI
As of July 31, 2025, Meta Platforms Inc. is set to significantly increase its investment in artificial intelligence, leveraging its robust, advertising-driven cash flows to fund large-scale spending on data centers, AI infrastructure, and talent acquisition. The company’s restructured AI operations will be housed as Meta Superintelligence Labs, aiming to integrate GenAI advancements across its advertising products and core platforms. This strategic focus signals Meta’s commitment to AI-driven innovation, with capital expenditures for 2025 projected to rise sharply up to $72bn on AI infrastructure.
Meta’s aggressive capital outlays are expected to reinforce its core advertising business by driving greater ad efficiency and enabling advanced GenAI product features. This investment also positions Meta to unlock new revenue streams and maintain a long-term competitive advantage against key industry peers like Alphabet and Microsoft.
Decent long-term performance over peer
Meta reported a strong top-line performance over FY 21-24, posting a revenue CAGR of 11.7% to reach $165bn, driven by an increment in the advertising revenue, ad impressions, and rise in average price per ad. Operating income rose at a CAGR of 13.4% to $68.2bn, with margins expanding by 183bp to 41.5%. Net income increased at a CAGR of 16.6%. These results were driven by efficient cost management, with a reduction in marketing and sales, and general and administrative expenses.
A steady growth in net income led to an increase in FCF, from $28.8bn in FY 21 to $36.5bn in FY 24, boosted by operational efficiency.
Cash and cash equivalent rose from $16.6bn to $43.9bn. In addition, ROE also increased from 31.1% to 37.1%.
In comparison, Alphabet Inc., a local peer, reported slightly lower revenue CAGR of 10.8% over the past three years, reaching $350bn. EBIT surged at a CAGR of 13.2% to $114bn, with margins expanding by 200bp to 32.6%. Net income increased with a CAGR of 9.6% to $100bn.
Optimistic projected financial growth
Over the past 12 months, the company’s stock has delivered solid returns of approximately 59.1%. In comparison, Alphabet Inc.’s stock significantly underperformed and delivered returns of 17% over the same period.
Meta is currently trading at a P/E of 27.9x, based on the FY 25 estimated EPS of $27.8, which is higher than its 3-year historical average of 20.8x and Alphabet Inc.’s valuation of 19.6x. The company is currently trading at an EV/EBIT multiple of 24.1x, based on the FY 25 estimated EBIT of $79.1bn, which is higher than its 3-year historical average of 16.3x and Alphabet Inc. (17.5x).
Meta is monitored and largely liked by 67 analysts, 60 of whom have ‘Buy’ ratings and seven have ‘Hold’ ratings for an average target price of $846.3, implying a 9% upside potential from the current price.
Analysts’ views are supported by an estimated revenue CAGR of 15.8%, reaching $255.2bn and EBIT CAGR of 12.4% over FY 24-27, reaching $98.6bn with margin of 38.6% in FY 27. In addition, analysts estimate a net profit CAGR of 11.3%, reaching $86.1bn with a margin of 33.7%, with EPS expected to increase to $33.8 in FY 27 from $23.9 in FY 24. Likewise, the analysts estimate an EBIT CAGR of 13.5% and a net profit CAGR of 12% for Alphabet Inc.
Overall, the company has demonstrated robust financial performance, driven by strong digital advertisements and significant growth in engagement across its platforms. Initiatives on cost optimization and AI-driven ad solutions have boosted improvement in margins and bolstered earnings growth.
However, the company faces multiple risks, including regulatory scrutiny over content moderation, antitrust concerns, and data privacy. Meta is also exposed to an intensely competitive business environment from peers like Alphabet, TikTok, Snapchat, etc. In addition, heavy investment in VR/AR and metaverse can lead to execution and adoption risks.
