Shares of Facebook parent Meta Platforms (META) witnessed an impressive growth of over 150% in 2023. The stock continued its upward momentum in 2024 and is currently trading near its all-time high, with a year-to-date gain of about 45%. Analysts have maintained a bullish stance on META stock but predict a modest upside from current levels. Their optimism about the company’s long-term potential is backed by robust operating performance in recent quarters, significant investments in artificial intelligence (AI), and ongoing product development.
Let’s dive into the details.
Meta Rides High on Strong Performance
After a brief slowdown in 2022, Meta has rebounded strongly in recent quarters. In its latest results released in July, the company reported significant growth in both revenue and profit. In Q2 2024, Meta’s revenue surged 22.1% year-over-year to $39.07 billion. This growth rate is double that of Google’s (GOOG) advertising sales, which saw an 11% sales increase in Q2 2024.
Additionally, Meta Platforms has more than 3 billion daily active users (DAP). This vast user base offers substantial value for marketers aiming to reach specific target audiences. Meanwhile, Meta’s net income increased 73% to $13.5 billion in Q2.
Looking forward, Meta issued third-quarter revenue guidance in the range of $38.5 billion to $41 billion, with the midpoint slightly above analysts’ expectations of $39.1 billion.
Meta’s Strong Ad Growth Highlights AI Success
Meta is heavily investing in AI and virtual reality, which are attracting significant investor interest. The company credits its recent advertising success to these increased investments in AI.
CEO Mark Zuckerberg highlighted that the company’s emphasis on AI is improving recommendations, helping users find better content while making advertising more effective.
In terms of outlook, Meta expects substantial capex (capital expenditures) growth in 2025 to support its AI research and product development initiatives. For 2024, Meta forecasts capex between $37 billion and $40 billion, raising the lower end of the range from $35 billion.
Insights from TipRanks’ Bulls Say, Bears Say
According to TipRanks’ Bulls Say, Bears Say tool, Bulls are optimistic about the company’s strong advertising growth. The company witnessed a 10% jump in both ad impressions and average price per ad in Q2, reflecting improvements in user engagement and ad performance. Analysts are also bullish on the way the company is capitalizing on AI to boost engagement and drive revenue growth.
On the other hand, Bears are concerned about the increasing capex. Moreover, losses from META’s Reality Labs division, which focuses on the metaverse, continue to be a drag.
Is Meta Stock a Good Buy?
META stock has received a Strong Buy consensus rating on TipRanks, backed by 39 Buys, three Holds, and one Sell recommendation. The Meta Platforms share price target of $582.38 implies 13.6% upside potential from current levels.
Conclusion
Meta Platforms stock is going strong and hovering near its all-time high. The company is capitalizing on the AI trend and enjoying a robust advertising business. Analysts stay bullish with some near-term concerns over the growing capex and the financial burden from Meta’s Reality Labs division.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
