Meta Has Gained 26% In 2025, Can The Rally Continue?

Meta Platforms META stock traded above its 50-day moving average and close to its 52-week high of $747.90 on Wednesday.

The stock has surged 26% year-to-date, topping the Nasdaq 100 index’s ~9% and the S&P 500 index’s over 6%.

The Facebook and Instagram parent gained over 25% in the last three months, compared to the Nasdaq 100’s over 19% and the S&P 500’s over 14%.

Also Read: Meta Secures More Clean Energy For Power Hungry AI And Data Center Growth

What Has Driven Meta’s Rally?

Meta aims to unlock value by strategically investing in AI and its core products. The company focuses on boosting user engagement, upgrading its advertising tools, and launching new AI-driven features.

Meta also stands to gain billions of dollars from a potential TikTok ban as it erases a direct competitor to the social media platform.

Meta is expanding its AI efforts by making Meta AI available across Facebook, Instagram, and WhatsApp, where it already reaches around 700 million users.

The company also plans to test a paid subscription model similar to ChatGPT’s premium tier. CEO Mark Zuckerberg said Meta is focused on scaling a smart, personalized AI assistant to over 1 billion people this year, positioning Meta AI as a market leader.

To support these efforts, Meta is ramping up capital spending on AI infrastructure, including data centers, and expanding its AI workforce.

Meta’s Latest Quarterly Results

On April 30, Meta reported first-quarter revenue of $42.31 billion, up 16% on a year-over-year basis, beating analyst estimates of $41.39 billion.

Family daily active people climbed 6% to 3.43 billion. Ad impressions jumped 5%, and the average price per ad increased by 10%.

Operating margins totaled 41%, up from 38% in the prior year’s quarter.

Meta expects second-quarter revenue of $42.5 billion-$45.5 billion versus estimates of $44.06 billion.

The company anticipates full-year capital expenditures of $64 billion to $72 billion (up from prior guidance of $60 to $65 billion), which reflects additional data center investments to support its artificial intelligence efforts and an increase in the expected cost of infrastructure hardware.

How Is Meta Accomplishing Its Ambitions?

On January 14, Meta announced performance-based job cuts that could impact about 5% of its 72,000 workers. The company cited its plans to raise the bar on performance management and move out low-performers faster.

Meta is actively recruiting top AI talent from rivals like OpenAI, Alphabet GOOGL Google DeepMind, Anthropic, and Apple AAPL to accelerate its artificial general intelligence (AGI) push through its Superintelligence Labs (MSL), launched in June 2025.

Under CEO Mark Zuckerberg’s leadership, Meta has consolidated its Llama models and FAIR research into MSL, aiming to build “personal superintelligence” for its platforms.

Meta has hired seven researchers from OpenAI to power this vision, including experts in large language models and reinforcement learning, machine learning veteran Jack Rae, and image generation specialist Huiwen Chang from Google DeepMind.

Apple’s former Foundation Models lead, Ruoming Pang—behind projects like Genmoji and Siri upgrades—joined MSL with a reported multimillion-dollar offer. Meta added Claude developer Anton Bakhtin and inference specialist Joel Pobar from Anthropic.

Led by Alexandr Wang and Nat Friedman and supported by a $14.3 billion investment in Scale AI, MSL is rapidly assembling a high-caliber AI team.

Meta’s Inorganic Growth Strategy

Meta is in talks to acquire voice-cloning AI startup PlayAI along with some of its employees, according to Bloomberg sources.

While financial details remain undisclosed, the move reflects Meta’s push to develop a “superintelligence” lab and strengthen its position amid rising competition in the AI voice assistant market.

Meta is also reportedly planning a $15 billion investment in data-labeling startup Scale AI for a 49% stake and aims to bring its co-founder, Alexandr Wang, along with key researchers, on board. This move aligns with Meta’s strategy to build a “superintelligence” lab.

What Does Wall Street Think About Meta

Forty-three analysts have set a forecast of $734.93 for Meta. Tigress Financial issued the highest forecast, $935, on February 11, 2025, while Scotiabank gave the lowest, $525, on April 21, 2025.

Recent ratings from TD Cowen, Roth Capital, and Wells Fargo average $774.33, suggesting a potential 5.33% upside for the stock based on their projections.

Following its first-quarter results, Guggenheim analyst Michael Morris named Meta the best-positioned digital advertising company. JPMorgan’s Doug Anmuth reaffirmed Meta as a “top pick,” citing growing momentum behind its AI models, Andromeda and GEM.

Several Wall Street analysts agreed that Meta is well equipped to perform in a weaker macroeconomic climate and praised its capital spending as a solid foundation for future growth.

However, Needham analyst Laura Martin raised concerns about Meta’s long-term value, pointing out that the company doesn’t control its distribution channels or content and faces intense competition from Apple, TikTok, and YouTube.

TD Cowen’s John Blackledge flagged risks including declining engagement among younger users, regulatory and legal challenges, increasing competition, and the high costs of Reality Labs.

On March 18, Wolfe Research highlighted Meta’s WhatsApp business messaging, unlocking a total addressable market of $30–$40 billion (TAM).

Analysts expect Meta’s integration of AI agents for small business customer service to boost WhatsApp revenue significantly.

With WhatsApp currently contributing just $1.5–$2 billion, Wolfe noted

On July 3, Needham’s Laura Martin flagged Meta’s soaring capex—expected to rise 84% to $68 billion in 2025—as a concern for future returns.

She questioned Meta’s capital allocation amid heavy spending on GenAI, metaverse, Scale AI, and hardware ventures. Martin also cited regulatory risks and high investor expectations, cautioning that Meta may be overvalued at current levels.

Price Action: META stock closed up by 1.68% to $732.78 on Wednesday.

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