Meta Platforms Reports Impressive Q4 2024 Results, Driven by AI and Core Business Strength

Meta Platforms (NASDAQ: META) showed remarkable financial performance in the fourth quarter of fiscal 2024, which ended on December 31, 2024. The company’s revenues and earnings exceeded analysts’ predictions, prompting a nearly 9% surge in Meta’s stock price shortly after the announcement. Although some gains have been lost, the stock remains up about 3%. Investors are enthusiastic about the robust performance of Meta’s core social media and digital advertising sectors, along with the impact of its artificial intelligence (AI) initiatives during challenging market conditions.

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Meta’s total revenue rose by 21% compared to last year, reaching $48.4 billion, surpassing the Wall Street forecast of $47 billion. Additionally, diluted earnings per share (EPS) increased by 50% year over year to $8.02, significantly higher than the projected $6.76.

While Meta’s stock has recently shown strong growth, analysts see great potential for further increases, suggesting that the stock could rise even more in 2025.

A Strategic Focus on AI

Meta’s comprehensive AI strategy includes developing AI-optimized infrastructure and AI-enhanced consumer applications. The company plans to invest between $60 billion and $65 billion in capital expenditures for fiscal 2025, focusing on generative AI initiatives and enhancing its core operations. A significant aspect of this investment will be on expanding data center capacity to fuel advanced AI models.

Recently, Meta announced plans to introduce a gigawatt of new data center capacity by 2025, in addition to a two-gigawatt AI data center. CEO Mark Zuckerberg emphasized that this facility would be substantial enough to cover a significant portion of Manhattan.

Meta is making strides in open-source large language model (LLM) development, with the anticipated launch of the multimodal and open-source Llama 4 model featuring agentic AI capabilities. This development is especially important as competition with firms like the Chinese startup DeepSeek increases, making the establishment of American open-source AI standards more critical for national competitiveness. Meta also plans to integrate some of DeepSeek’s advanced technologies into its systems.

In addition to infrastructure enhancements, Meta’s agentic AI has gained traction. By the end of 2024, its highly personalized Meta AI assistant had over 700 million monthly active users, and Zuckerberg predicts that number could exceed 1 billion by 2025.

Strength of Core Business

Meta’s core social media and digital advertising services remain strong, benefiting from its AI-driven personalization and marketing strategies. The Family of Apps segment, featuring platforms like Facebook, Instagram, Messenger, Threads, and WhatsApp, continues to thrive, with over 3.3 billion daily users as of December 2024.

Despite its age, Facebook is experiencing growth in user engagement, reaching over 3 billion monthly active users. Instagram has become a vital platform for content discovery, with over 4.5 billion daily re-shares of its Reels content. Meanwhile, Threads boasts 320 million monthly active users, and WhatsApp is quickly establishing itself as the leading messaging app in the U.S.

Due to its expansive user base and high engagement, Meta’s platforms are increasingly attractive to advertisers. In Q4, the Family of Apps generated $46.8 billion in ad revenue, reflecting a 21% year-over-year increase. Moreover, Meta observed a 14% rise in the average price per ad and a 6% increase in ad impressions compared to the previous year in Q4.

The integration of the Andromeda machine learning system, developed with Nvidia, has enhanced advertising efficiency, allowing for the use of vastly more complex models for ad retrieval.

This sophisticated use of AI models has improved ad personalization, resulting in nearly an 8% increase in ad quality. Consequently, advertisers are seeing better returns, and user engagement has improved across the board.

Evaluating Valuation

Currently, Meta’s stock trades at 27.5 times forward earnings, which might appear high initially. However, this valuation is justified considering the company’s strong performance in digital advertising, its dominance in social media, its promising financial growth, and its successful AI strategy.

Meta is expected to see its revenues and EPS grow by 14.6% and 5.4%, respectively, in fiscal 2025. While these growth rates may seem modest, they are impressive given the high revenue base of $164.5 billion and EPS of $23.86 in fiscal 2024.

Additionally, Meta holds $77.8 billion in cash, providing it with financial flexibility to invest in future projects while also returning value to shareholders through dividends and stock repurchases. Thus, Meta currently stands out as a compelling investment opportunity.

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Randi Zuckerberg, a former director of market development at Facebook and sister to CEO Mark Zuckerberg, serves on The Motley Fool’s board of directors. Manali Pradhan has no positions in the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia, following its disclosure policy.

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