Meta Platforms (META) saw its shares edge higher in early trading on Friday following an optimistic forecast from a prominent Wall Street analyst, who has highlighted the social media giant as one of his top picks for the upcoming year.
Meta, the parent company of Facebook and Instagram, was one of the standout performers among the “Magnificent 7” stocks last year, soaring more than 66% and adding over $630 billion in market value. This growth was driven by strong user engagement and rising ad revenues as global online spending rebounded. Investors are also betting that Meta’s growing investment in artificial intelligence (AI), as well as its hardware and products, will spur further growth, helping to offset the substantial increase in capital spending anticipated by CEO Mark Zuckerberg.
Capital Spending and AI Push
In a Facebook post on Friday, Zuckerberg revealed that Meta is expected to spend between $60 billion and $65 billion on capital projects in 2025, marking a sharp rise of $32 billion from the previous year’s forecast. This spending forecast is significantly higher than the Street’s consensus of around $51 billion. Zuckerberg also emphasized the importance of Meta’s AI efforts, stating, “I expect Meta AI will be the leading assistant serving more than 1 billion people, Llama 4 will become the leading state-of-the-art model. This is a massive effort, and over the coming years, it will drive our core products and business, unlock historic innovation, and extend American technology leadership.”
AI Driving Ad Sales Momentum
Truist analyst Youssef Squali, who maintains a “buy” rating with a price target of $700, sees Meta’s AI focus already making a positive impact on its advertising performance. Squali pointed out that Meta’s AI investments have led to improved ranking and recommendation algorithms, which have fueled sustained ad spending—particularly in consumer packaged goods (CPG) and mid-to-upper funnel categories. He also sees potential in AI agents and augmented reality (AR) and virtual reality (VR) products as Meta continues to invest in these technologies.
Meta Positioned to Benefit from TikTok’s Troubles
In addition to its internal AI initiatives, Meta is also poised to benefit from the ongoing uncertainty surrounding ByteDance-owned TikTok. The short-video platform is facing pressure from U.S. regulators, with Congress forcing the company to either divest its U.S. operations or shut them down. Meta is moving quickly to capture some of TikTok’s 170 million U.S. users, with Instagram Reels and other short-form video offerings taking center stage. Squali views Meta as a key beneficiary of TikTok’s challenges, calling it one of his “favorites” for 2025.
Q4 Earnings Preview
Meta is set to announce its fourth-quarter earnings on Wednesday, January 29. Analysts are expecting a solid performance, with earnings per share (EPS) of $6.77—an increase of 27% compared to the same period last year. Revenue is forecasted to rise 17%, reaching approximately $47 billion. Last fall, Meta provided a revenue guidance range of $45 billion to $48 billion and projected capital spending for 2024 to be in the $38 billion to $40 billion range.
Looking ahead, Squali anticipates that Meta will report results at the higher end of its guidance, in line with the broader Street consensus. However, he cautioned that tougher year-over-year comparisons may lead to a slight slowdown in revenue growth in the current quarter, with projected revenue between $41 billion and $43 billion.
Meta’s heavy focus on AI innovation, its dominance in the social media landscape, and its strategic moves to capitalize on TikTok’s challenges make the company an intriguing prospect for investors as it heads into 2025.
Related topics:
USD/CAD Declines as US Dollar Pulls Back After Rally
Mexican Peso’s Uncertainty Amid Fed’s Influence and Banxico’s Decision
