Meta, the parent company of Facebook, has experienced a remarkable 16-day stock rally, fueled by various news events—even those that have negatively affected its larger competitors—bringing its valuation close to $2 trillion for the first time. “I’ve always believed that Meta stands as the leading beneficiary of AI, second only to Nvidia, and I think that perspective is gaining traction,” remarked Conrad van Tienhoven, a portfolio manager at Riverpark Capital.
While companies like Microsoft and Alphabet are facing uncertainty regarding the returns on their substantial AI investments, Meta has already allocated funds toward AI solutions that have led to immediate improvements in ad targeting and measurement, resulting in faster growth and increased average revenue per user. According to Bloomberg data, Meta’s stock has achieved the longest winning streak of any current component in the Nasdaq 100 Index since 1990, rising over 17% during this period and boosting its market cap beyond $1.8 trillion, despite still being considered one of the more affordable options among large tech firms.
The catalysts for this surge have been noteworthy. In January, CEO Mark Zuckerberg announced plans to invest as much as $65 billion in AI initiatives by 2025, exceeding previous expectations. Although capital expenditure plans have faced scrutiny, Meta’s ambitious targets have enhanced the perception that the company is investing from a strong position.
Even amidst turbulence caused by the emergence of DeepSeek, a Chinese AI startup that has reported strong performance at lower costs and with fewer chips, Meta’s stock continued to rise. Investors interpreted DeepSeek’s success as endorsement for open-source models like the one used by Meta’s Llama. The company’s financial results have highlighted the positive impact of AI on ad targeting across its vast user base. Zuckerberg emphasized that 2025 would be a “significant year” for AI, and on Monday, Meta began notifying employees of job cuts as it shifts its focus toward AI expertise. Zuckerberg has also undertaken notable changes to better align Meta with the Trump administration, with the stock’s upward trend starting prior to the inauguration in January. This recent momentum sharply contrasts with Alphabet, another major player in digital advertising, which has disappointed investors with its results, leaving its shares down for the year, while Meta has gained approximately 23%.
“Meta is clearly outpacing its competitors in demonstrating that its capital investments in AI are effective, which is why investors are drawn to it,” said Jim Polk, head of equity investments at Homestead Advisers. “It has shown tangible impacts of AI on user engagement and profit margins, while Alphabet still needs to validate the effectiveness of its capital spending and ensure its market share in search remains intact.” According to Bloomberg data, Meta’s revenue growth is projected to increase nearly 15% in 2025 before slowing slightly in the following years, while net earnings growth is expected to accelerate from 6.2% this year to 15% by 2026.
