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Meta Platforms META shares are trading at a premium as suggested by the Value Score of D. In terms of the forward 12-month Price/Earnings (P/E), META is trading at 24.18X, a premium compared with the Zacks Computer & Technology sector’s 23.72X.
Meta Platforms shares are trading at a premium compared to its closest peer in the digital advertising domain, Alphabet GOOGL, but at a discount compared with Amazon AMZN. In terms of the forward 12-month P/E, Alphabet shares are trading at 16.26X, while Amazon is trading at 31.44X. Meta Platforms, Alphabet and Amazon are expected to absorb roughly 50% of the projected global ad spending by 2028.
P/E Ratio (F12M)
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Although higher tariffs and a prolonged trade war have the potential to hurt digital advertising spending, negatively impacting prospects, we believe Meta Platforms’ AI focus is a key catalyst. Meta Platforms’ focus on leveraging AI to improve user engagement is noteworthy. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.43 billion daily users. Meta AI usage continues to increase, with roughly one billion monthly users globally. The company’s initiative to add updates that will help Meta AI deliver more personalized and relevant responses is expected to boost engagement.
Amid an uncertain macroeconomic environment, Meta Platforms shares have appreciated 9.2% year to date, outperforming the broader sector as well as peers, including Alphabet and Amazon, shares of which have dropped 4.9% and 16.3%, respectively.
META Stock’s Performance
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META shares are trading above the 50-day and 200-day moving averages, indicating a bullish trend.
META Shares Trade Above 50-Day and 200-Day SMAs
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META Leverages AI to Boost Advertising Revenues
Meta Platforms focuses on improving advertisers’ return on ad spending. Its proprietary machine learning system, Andromeda, for retrieval in ad recommendation is powered by NVIDIA NVDA. The deployment of META’s deep neural network on the NVIDIA Grace Hopper Superchip across Instagram and Facebook applications has achieved more than 6% recall improvement to the retrieval system while delivering over 8% ad quality improvement on selected segments.
Meta Platforms’ focus on making Meta AI the leading personal AI with a deepening emphasis on personalization, voice conversations, and entertainment is a key catalyst. The launch of Meta AI’s standalone app is a noteworthy development in this regard.
The launch of the new Generative Ads Recommendation model for ads ranking that was used on Facebook Reels has increased conversion rates by 5%. Meta Platforms also saw 30% more advertisers using AI creative tools. Improvements in META’s recommendation system have led to a 7% increase in time spent on Facebook, a 6% increase on Instagram, and a 35% increase on Threads over the past six months.
META’s growing focus on social commerce through Facebook, Instagram and WhatsApp is noteworthy. In first-quarter 2025, WhatsApp Business Platform as well as Meta Verified subscriptions contributed to deliver 34% year-over-year growth in Family of Apps other revenues, reaching $510 million.