Meta Platforms' Revenue Jumps as It Plans to Invest Big in AI. Is the Stock a Buy?

Meta Platforms' (NASDAQ: META) share price rose after the social media company released strong fourth-quarter results, once again showing that its social media sites are top destinations for both users and advertisers. The company also remained committed to spending big on artificial intelligence (AI). The stock has been off to a fast start in 2025, with its shares already up 17% as of this writing.

Let's examine Meta's Q4 earnings and guidance to see if its stock is still a good investment.

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AI is helping power results

Meta turned in another great quarter to close out 2024, with revenue climbing 21% year over year to $48.4 billion. Advertising revenue was also up 21%, coming in at $46.8 billion. Revenue at Reality Labs, which is home to Meta's metaverse efforts and its augmented reality headsets and smart glasses, edged up 1% to $1.1 billion. Operating income from its social media apps surged 35% to $28.3 billion, though Reality Labs generated a loss of $5 billion.

Earnings per share (EPS) soared 50% year over year to $8.02. The results easily topped the analyst consensus, as compiled by LSEG, for revenue of $47 billion and EPS of $6.77.

Family daily active people (DAP), a measurement of registered users who log in to one of Meta's apps on a daily basis, rose 5% year over year to 3.35 billion in December; that was just above analyst expectations for 3.32 billion. Family average revenue per person (ARPP), meanwhile, jumped nearly 16% to $14.25.

Ad impressions increased 6% year over year, while the average price per ad jumped 14%. This shows that Meta is continuing to add more users and continuing to better monetize its user base, by serving them more ads and being able to charge more to advertisers. This stems from increasing advertiser demand driven by ad performance.

Meta's newest app Threads reached 320 million monthly active users at year-end, and the platform continues to add about 1 million users a day. The company plans to introduce ads gradually to the platform, but it won't be a meaningful contributor this year.

Looking ahead, Meta forecasts first-quarter revenue to be between $39.5 billion and $41.8 billion, for growth of 8% to 15% year over year. The midpoint of $40.7 billion was below the $41.7 billion analyst consensus. Meta forecast full-year 2025 capital expenditures to range from $60 billion to $65 billion, which is a big jump from the $39.2 billion it spent in 2024. Much of this will be directed toward increasing AI capacity and data center expansion; the company believes that building out its own AI infrastructure will be a strategic advantage. Currently, 700 million people actively use Meta AI each month, and it expects this to reach 1 billion users this year.

Founder and CEO Mark Zuckerberg expects Meta AI to become the world's leading AI assistant. He noted that the Llama large language model (LLM) is reaching scale; he sees the newest version, Llama 4, as being transformative, having both agentic AI and multimodal features. In addition, the company is investing in custom AI chips for specific workloads to improve efficiency.

Image source: Getty Images.

Is it time to buy Meta stock?

Despite the news regarding DeepSeek and what it might mean for spending on AI and advanced semiconductor chips, Zuckerberg has said Meta is not backing down from its AI spending plans. He thinks investing in AI infrastructure will be a big advantage, both in the quality of the service and in being able to achieve the scale it wants to reach. He said that everyone could learn that this investing isn't an advantage after all, but that it's way too early to say that now. Meanwhile, the company seems to have some pretty big plans with Llama 4.

At the same time, Meta's core platforms are humming along, with both increased engagement for users and improved monetization. This quarter once again showed that Meta is one of the best companies at monetizing its user base through advertising. Just as important, it looks like it's in the process of building its next big platform with Threads. Zuckerberg has been a master of building audiences and then later monetizing them, so this is a big opportunity down the road.

From a valuation perspective, Meta stock trades at a forward price-to-earnings (P/E) ratio of under 24, based on 2025 analyst estimates. Given its revenue growth of over 20% and its strong business model, that's a pretty attractive valuation.

Data by YCharts.

As one of the leading digital advertising companies in the world and one with big investments in AI, Meta Platforms is likely to remain a solid long-term winner. The company also continues to invest in the metaverse, which adds some optionality should that ever live up to Zuckerberg's vision.

At current levels, I think the stock is a buy.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.