Meta Platforms (META +0.22%) continues to be a monster winner for investors. Shares are up 42% in the past 12 months (as of June 6) thanks to strong financial results that keep impressing the market.
If you're a new investor in this dominant social media enterprise, you're certainly looking at what the future holds. Maybe the good times won't end anytime soon. Where will Meta Platforms stock be in one year?
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Meta's AI progress
The most notable theme in recent memory is just how much companies are focused on artificial intelligence (AI). Meta is no different. It's one of the top businesses in the space already.
Meta launched Meta AI, a chatbot assistant across its apps, in April 2024. It can answer questions from users and also create content and generate photos. "Across our apps, there are now almost a billion monthly actives using Meta AI," founder and CEO Mark Zuckerberg said on the first-quarter 2025 earnings call.
The company is also operating in the hardware space, with the Ray-Ban smart glasses, which are integrated with the Meta AI assistant. Monthly active users are up more than fourfold in the past year.
Of course, Meta generates virtually all of its revenue from digital ad efforts. It's already leveraging AI to better serve these customers, and Zuckerberg provided a clear intent looking ahead:
"Our goal is to make it so that any business can basically tell us what objective they're trying to achieve -- like selling something or getting a new customer -- and how much they're willing to pay for each result, and then we just do the rest," he said.
Therefore, from a purely competitive standpoint, I don't think anyone would disagree that Meta will be in a stronger position a year from now. This perspective is bolstered by the fact that the leadership team plans to spend $68 billion on capital expenditures (capex) just in 2025.
Growing the bottom line
One key factor that can drive stock performance is rising earnings per share (EPS). In the past five years, Meta's EPS grew at a compound annual rate of 30.3%. And according to Wall Street consensus analyst estimates, this critical metric is projected to increase at an annualized pace of 11.2% between 2024 and 2027.
This projection, which reflects a slowdown, is reasonable, in my opinion. In fact, it might be conservative if you look at the strong momentum of the company.
Meta has no problem in the profitability department. This is one of the most financially sound companies in the world. Meta's operating margin came in at a stellar 41% in Q1. And during that three-month stretch, it produced $10.3 billion of free cash flow.
NASDAQ: META
Key Data Points
Consider the backdrop
Besides growing EPS, a stock will do well if the valuation also improves. As of this writing, Meta shares trade at a price-to-earnings (P/E) ratio of 27.2. It's easy to argue that Meta's valuation multiple will expand. I wouldn't be surprised if the P/E multiple rises to 30 in 12 months' time. If the business can keep growing revenue and EPS, then this is a likely scenario.
Meta is a best-in-class company. It possesses unrivaled network effects that are essentially impossible for any rival to disrupt. The business rakes in massive profits and cash flow. And it's positioning itself for an AI future.
Plus, the macro situation could become more favorable to stocks. The Federal Reserve is expected to cut interest rates before the year is over. Lower interest rates make stocks more attractive to investors because it forces them to take on more risk to earn better returns.
I wouldn't be surprised if Meta shares can generate a double-digit gain for investors between now and June 2026.
