Meta Platforms Emerges as AI Champion Amid Market Struggles
Artificial intelligence (AI) stocks experienced significant growth in 2023 and 2024. However, 2025 has been challenging amid a broader market sell-off that has hindered companies seeking to leverage the fast-growing adoption of this technology.
The Nasdaq Composite index recently entered bear territory, currently down 15% from its all-time high. Ongoing tariff-related uncertainties have driven investors to adopt a risk-reduction strategy, aiming to safeguard their investments against potential economic turbulence linked to a possible trade war.
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This backdrop elucidates why AI leader Nvidia has seen a 15% decline year-to-date, despite posting solid results recently. The stock initially soared as tech giants and various countries rushed to acquire its AI data center graphics cards. However, current market dynamics have prompted many investors to secure profits from the stock.
The early phases of AI adoption afford Nvidia various catalysts to maintain healthy growth in the long term. However, the stock may continue to feel pressure from tariff-related uncertainties.
In contrast, another tech giant may rebound from its recent slump and potentially outperform Nvidia’s returns in 2025 and beyond—Meta Platforms (NASDAQ: META).
AI’s Role in Boosting Meta’s Market Position
Recognized for its popular social media platforms—including Facebook, Instagram, Messenger, and WhatsApp—Meta has cultivated a substantial user base, positioning it well to benefit from the increasing AI adoption in digital marketing.
At the end of 2024, Meta reported 3.35 billion daily active users across its family of apps, which represents about 40% of the world’s population.
This extensive reach makes Meta a prime choice for brands and businesses aiming to engage a wide audience. The company has introduced AI tools to assist its advertisers in better reaching customers.
An example is Advantage+, which automates ad creation, allowing advertisers to concentrate on more strategic initiatives. Notably, Advantage+ employs AI to enhance ad campaigns, optimizing them for superior outcomes.
Meta’s AI advertising tools are yielding strong returns for advertisers. According to eMarketer, Meta’s AI-driven ads achieved a 22% higher return in 2024 compared to the average ad on its platform. The application of AI improves audience targeting, leading to enhanced engagement and conversion rates.
Consequently, advertisers are willing to invest more in access to Meta’s platforms. This demand has driven a 14% increase in the average price per ad during the fourth quarter of 2024. In just six months, the utilization of Meta’s generative AI ad tools has quadrupled, reaching 4 million advertisers.
To expand its AI offerings for businesses, Meta plans to launch the Llama 4 open-source model, facilitating the integration of agentic AI functions for companies. A company executive noted that there are approximately 200 million small businesses using Meta’s services globally. Meta intends to assist these businesses in reducing inefficiencies, attracting more customers, and enhancing service delivery using its innovative AI solutions.
Agentic AI presents a significant opportunity, with Market.US estimating an annual growth rate of 44% for the sector through 2034. The technology’s capacity for autonomous operation and task execution without human input adds to its appeal.
Overall, Meta Platforms is poised to capitalize on substantial AI-driven business opportunities in the long term. Its core digital advertising market is projected to surpass $1.2 trillion in revenue by 2030, advancing at an annual growth rate of 15%. Meta has already outpaced this growth with a 22% revenue increase in 2024, reaching $160.6 billion, bolstered by its AI tool implementations.
Valuation and Growth Signal Significant Upside Potential for Meta Stock
Meta Platforms is currently associated with a 12-month median price target of $770 among 74 analysts covering the stock, with 86% rating it as a buy. This target suggests a potential gain of 31% from the current trading price of the stock.
Analysts also anticipate a revenue increase of 14% in 2025, projecting earnings of $187.7 billion. However, the rapidly increasing adoption of generative AI tools within the digital ad sector could help Meta exceed this forecast.
Robust profit growth has led the company’s valuation to drop to 24 times trailing earnings—its lowest valuation in two years—below the Nasdaq 100 index price-to-earnings ratio of 27. Investing in this stock seems prudent before it ascends once again.
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Randi Zuckerberg, a former director of market development and spokesperson for Facebook and sister to CEO Mark Zuckerberg of Meta Platforms, serves on The Motley Fool’s board of directors. Harsh Chauhan holds no positions in the mentioned stocks. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. A disclosure policy is in effect.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
