Meta Platforms (META 1.19%) shareholders have been in for a wild ride in 2025. After soaring more than 25% in the first month and a half of the year, shares then lost about a third of their value by early April. But now the stock has almost fully recovered to highs achieved earlier this year. As of this writing, the stock is up 22% year to date.
With the growth stock's sharp rebound occurring ahead of Meta's second-quarter earnings release next week, the pressure is on. Can the social media company deliver? Going further, is the stock still attractive at its current price?
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Soaring profit and big AI bets
Probably the two biggest drivers for Meta's strong share price performance this year are its robust financial performance and the company's aggressive bets on artificial intelligence (AI) -- bets investors are hoping will pay off in new revenue streams and rapid sales growth in the years ahead.
Looking to the company's fundamentals, Meta's recent bottom-line performance has been especially impressive. A combination of double-digit revenue growth and significant operating margin expansion has led to explosive growth in earnings per share. For instance, first-quarter revenue rose 16% year over year while operating margin expanded from 38% to 41%, resulting in earnings per share of $6.43 -- up 37% from the year-ago period. Helping this growth was growth in daily active users, ad impressions, and average price per ad. These figures rose 6%, 5%, and 10%, respectively, in Q1.
Also influencing investor sentiment toward the stock recently has been Meta founder and CEO's intensified focus on AI initiatives.
"Across our apps, there are now almost a billion [monthly active users] using Meta AI," said Meta CEO Mark Zuckerberg in the company's first-quarter earnings call. "Our focus for this year is deepening the experience and making Meta AI the leading personal AI -- with an emphasis on personalization, voice conversations, and entertainment."
Since these telling comments, Zuckerberg has been putting Meta's money where his mouth is and has been on a hiring spree of high-profile AI talent.
What to expect from Q2
Going into Meta's second-quarter earnings report next week, investors should expect more strong top and bottom-line growth. Management guided for second-quarter revenue to be in the range of $42.5 to $45.5 billion. This outlook implies 8.8% to 16.5% growth. The current consensus analyst forecast calls for revenue of about $45.8 billion, translating to 14.5% year-over-year growth.
Given how significant Meta's operating leverage was in Q1, more operating margin expansion is likely in Q2. This means earnings per share, when adjusted for any irregular charges, should grow faster than revenue.
Meta stock: Buy, sell, or hold?
Interestingly, Meta shares don't look too expensive -- even after the stock's recent run higher. Shares trade at just under 28 times earnings at the time of this writing. Considering the company's recent revenue growth and operating margin expansion, this is a reasonable price to pay -- especially when investors consider Meta's track record of delivering strong earnings-per-share growth.
So, is Meta stock a buy after its recent run higher? I believe the stock still looks somewhat attractive at its current price. But there are some substantial risks. First and foremost, investors should keep in mind that Meta's business model is highly dependent on advertising. If the economy weakens, companies may opt to reduce their advertising spend. Second, the company's big bets on artificial intelligence may be exciting but they are somewhat speculative. For instance, it's difficult to know if Meta's future revenue streams from AI products will exceed the costly computing and talent expenditures associated with them.
Overall, I believe shares are still attractive at their current price. But, given the risks, investors should keep any position in the company small as a percentage of their overall portfolio.
