Meta stock (NASDAQ: META) recently reported its Q4 results, with revenues and earnings exceeding the street estimates. It reported sales of $48.4 billion and earnings of $8.02 per share, compared to the consensus estimates of $47.0 billion and $6.77, respectively. The company continued to benefit from an increasing user base. However, its Q1 outlook was below expectations, and its stock seems to be fully valued.

META stock, with 92% returns since the beginning of 2024, has significantly outperformed the S&P 500 index, up 27%. The company’s AI investments have started to pay off with increasing user engagement, boding well for its stock. But, if you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

How Did Meta Fare In Q4?

Meta Platforms’ revenues of $48.4 billion in Q4 reflected a 21% y-o-y rise, driven by a 6% rise in ad impressions and a 14% growth in average price per ad. Meta also reported a 5% rise in family daily active people (DAP) to 3.35 billion. Meta’s primary revenue stream comes from advertising across its family of apps (Facebook, Instagram, Threads, and WhatsApp). The company is leveraging AI to enhance its ad targeting capabilities and is investing in AI-powered content generation. To support its AI initiatives, Meta is making substantial infrastructure investments, with projected capital expenditures between $60-65 billion for 2025.

Not only did the company post higher revenues, its operating margin expanded to 48%, up around 700 bps y-o-y. Higher revenues and margin expansion resulted in earnings of $8.02 per share, up 50% y-o-y. Looking forward, Meta expects its Q1 revenue to be in the range of $39.5 billion to $41.8 billion. At the mid-point of this range, the sales are falling short of the street expectation of $41.7 billion.

What Does This Mean For META Stock?

Despite a solid Q4 beat, META stock may not see any meaningful growth as investors will weigh the underwhelming Q1 outlook and high capital expenditures planned this year. Looking at the stock’s performance over a slightly longer period, the increase in META stock over the last four-years has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 23% in 2021, -64% in 2022, 194% in 2023, and 66% in 2024.

In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and the rise of AI in China, could META stock see a strong jump? While we will soon update our model for Meta Platforms to reflect the latest results, it seems to be fully valued. At its current levels of $690, META stock is trading at 29x trailing earnings of $23.86 per share, compared to the stock’s average P/E ratio of 24x over the last two years.

While a rise in valuation multiple for META seems justified given the solid advertising growth lately, continued aggressive investments into AI also poses a risk as to whether the investment will be worth it and eventually provide a meaningful boost to the company’s earnings growth.

While META stock looks fully valued, it is helpful to see how Meta’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 1/30/2025
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.