Meta Platforms (META) delivered blowout quarterly results last week, sending its stock soaring above its key $700 barrier on the back of massive growth in users, ad revenue, and profitability. In fact, META stock has not only spiked above $775 per share, but is also stepping up a gear and consolidating its newly found gains on substantial volume. Some Wall Street analysts, including the likes of Barton Crockett from Rosenblatt Securities, are now targeting $1,086 per share within 12 months.
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AI is the real engine behind the scenes—driving better conversions, personalizing content, and powering tools that help advertisers scale effortlessly. Meanwhile, Meta continues to improve operational efficiency, turning innovation into growing profits without ballooning expenses. Despite all this momentum, I believe the market still undervalues the company. That’s why I remain stoutly Bullish on META, which has long been my largest holding by far.
Still Growing Like It’s 2010
Meta’s Q2 numbers feel like a throwback to 2010, when the company was still in its startup phase. For starters, Meta’s user base is still ballooning, which is nuts for a company this massive. The report saw daily active users across Facebook, Instagram, WhatsApp, and Threads hit 3.48 billion, up 6% year-over-year, according to TipRanks data. For context on the pace, that’s like adding the population of Canada every year.
This growth fueled Meta’s ad engine, which churned out $46.56 billion in ad revenue, a 21% jump. In fact, ad impressions rose 11%, and the average ad price climbed 9%, indicating that Meta is squeezing more value from every user. AI was once again the wizard behind this quarter’s success.
On the earnings call, Mark Zuckerberg raved about how AI tools like Advantage+ boosted Reels conversions by 5% and time spent on Instagram by 6%. CFO Susan Li highlighted AI-driven ad translations, letting advertisers auto-translate captions into 10 languages, which spiked performance in early tests. These tools are making ads pop, especially for small businesses scaling up fast.
Clearly, the engagement boost made possible by AI is even more stunning when actioned by a mature company at scale. Instagram Reels saw a 24% surge in time spent, thanks to AI-powered recommendations fine-tuning what users see.
META’s other notable social media brand — Threads — is also gaining traction, with 35% more time spent compared to last year. It makes you wonder how long Meta will be able to keep expanding its audience, all while keeping users increasingly glued, which, in turn, means more ads served and more revenue per user (ARPU hit $49.63, up 11.28%). It certainly doesn’t look like this trend is going to fade out anytime soon.
AI Creates Margin Magic at META
The real standout in Meta’s Q2 report is that, alongside exceptional revenue growth, the company is becoming remarkably lean. Operating margin surged to 43%, up from 38% a year ago, driving operating income to $20.44 billion—a 38% jump. Expenses rose only 12% to $27.08 billion despite heavy AI investments, while headcount declined 1% to 75,945. In short, Meta is doing more with less, with AI sitting at the heart of this transformation.
On the earnings call, CFO Susan Li highlighted AI tools like Advantage+ and Andromeda, which boosted ad conversions by 5% on Instagram and 3% on Facebook, cutting costs for both Meta and advertisers while driving better returns. She also pointed to AI-powered image expansion tools that help small businesses create polished ads on tighter budgets, further reducing operational overhead.
This efficiency fueled a 36% surge in net income to $18.34 billion, with EPS climbing to $7.14. From ad delivery to content moderation, AI is streamlining everything, allowing Meta to scale without runaway costs. It’s as if they’ve unlocked a profitability cheat code—and the payoff is happening right now, not years down the line.
META is Misunderstood by Wall Street
Here’s the funny thing about META: the stock is currently trading at a forward P/E of around 26.7—a surprisingly low valuation for a company that’s delivered a 28% EPS CAGR over the past five years and just posted a 38% Q2 jump in EPS.
Analysts have seemingly underestimated Meta’s performance potential. At the start of the year, Wall Street projected just 5–6% EPS growth for 2025. Now, after back-to-back quarters of 35%+ EPS growth, they’ve bumped that forecast to 17%—yet that still implies virtually no growth in the second half of the year. That disconnect doesn’t add up.
Given the company’s momentum and track record, I believe META stock remains significantly undervalued.
Is META a Good Stock to Buy Now?
Wall Street remains highly bullish on Meta, with the stock carrying a Strong Buy consensus rating based on 41 Buy and three Hold recommendations over the past three months. Notably, not a single analyst rates the stock a Sell. META’s average stock price target of $872.73 suggests ~12% upside from current levels.
META is Firing on All Cylinders
All in all, Meta just delivered one of its strongest quarters to date—combining massive user growth, cutting-edge AI-powered ad performance, and expanding margins with ease. The company is clearly firing on all cylinders, yet the market continues to treat it like a slow-moving, mature tech name.
That disconnect is precisely why I’m staying long. With AI driving real, tangible value right now and a valuation that doesn’t reflect this momentum, META remains my highest-conviction position. Honestly, I believe the best is still to come.