Is Meta Still a 'Buy'? A Comprehensive Stock Analysis

Meta Platforms (META) — Stock Research Report

1. Executive Summary

Meta continues to lead via its Family of Apps segment (Facebook, Instagram, WhatsApp), powered by AI-enhanced advertising and cloud investments. Q2 2025 delivered impressive growth, of which further funding in AI infrastructure supports long-term upside despite near-term spending risks.

• Current Price (Sept 10, 2025): $751.93

• 12-Month Target Price Estimate: ~$911

• Recommendation: Buy

2. Financial Performance (Q2 2025)

Meta delivered an exceptionally strong quarter, demonstrating significant growth across all key financial metrics, with profitability growing even faster than revenue.

Overall Performance: The company saw a massive 22% year-over-year increase in revenue, translating to an additional $8.445 billion in sales compared to the same quarter last year. More impressively, net income surged by 36%, indicating highly efficient scaling and profitability.

Key Highlights and Analysis

1. Revenue Growth: +22%

• Q2 2025: $47.516 Billion

• Q2 2024: $39.071 Billion

• This robust growth suggests strong performance in its core advertising business, likely driven by increased engagement across its Family of Apps (Facebook, Instagram, WhatsApp) and improvements in ad targeting and measurement, potentially aided by AI.

2. Profitability Expansion (The Most Important Story)
Meta's true strength this quarter was not just in growing revenue, but in growing its profits at a much faster rate.

• Operating Income: Soared by 38% to $20.441 billion, up from $14.847 billion. This means more of each dollar earned was converted to profit.

• Operating Margin: Expanded significantly from 38% to 43%. This 5-percentage-point expansion is a critical indicator of operational efficiency. It means Meta is successfully controlling costs (or costs are growing slower than revenue), leading to fatter profits.

3. Bottom Line Growth

• Net Income: Increased by 36% to $18.337 billion, from $13.465 billion. This figure accounts for all other expenses and taxes and shows the final profit for shareholders.

• Diluted EPS (Earnings Per Share): Grew by 38% to $7.14, up from $5.16. This is the most important metric for shareholders, as it represents their share of the company's profits. The growth in EPS outpacing net income growth suggests Meta is also effectively reducing its share count through stock buyback programs.

Conclusion

Meta's Q2 2025 results are outstanding. The company is not only successfully growing its top line but is doing so with dramatically improved efficiency. The substantial operating margin expansion (from 38% to 43%) is the standout achievement, indicating that Meta's focus on efficiency and disciplined cost management, combined with strong revenue growth, is directly fueling a surge in profitability. This resulted in a remarkable 36% increase in net income and a 38% jump in earnings per share for its shareholders.

Note: The annotations "Meta +2" and "Q4cdn +2" appear to be internal data tags or formatting markers from the original source and are not part of the financial metrics themselves.

3. Discounted Cash Flow (DCF) Model – Summary

Assumptions:

• Revenue Growth (Next 5 years): 15% CAGR. Meta's last 10-year revenue CAGR is approximately 30%, reflecting its rapid expansion from a social media platform into a tech powerhouse. However the growt has been slowing recently. We Based on multiple long term projections of investosutra and Stockscan.

Year Revenue (USD billions) Growth Rate

2026 558.6 17.0%

2027 647.9 16.0%

2028 782.6 20.8%

2029 894.4 14.3%

2030 997.4 11.5%

CAGR (2026–2030): 15.1%

• Margin (FCFE / Revenue): ~25% conservative and 35% positive outlook

• Terminal Growth Rate: 3%

• Required Rate of Return on Equity: 11%

Projection (simplified): Scenario 1. Conservative

Projected FCFE for the first 5 years

1. Terminal Value (Year 5 disounted): Based on Year 5 FCF × (1 + g) / (WACC – g) equals $1,677.07B

2. Total discounted lifetime cash flows (FCFE) $2372.67B

3. Sum PV of FCF + PV of Terminal Value divided by 2.63B diluted shares outstanding→ Intrinsic Value ≈ $903/share.

Projection (simplified): Scenario 1. Positive outlook

Projected FCFE for the first 5 years

1. Terminal Value (Year 5 disounted): Based on Year 5 FCF × (1 + g) / (WACC – g) equals $2,347.90B

2. Total discounted lifetime cash flows (FCFE) $3,321.74B

3. Sum PV of FCF + PV of Terminal Value divided by 2.63B diluted shares outstanding→ Intrinsic Value ≈ $1264/share.

4. Relative (Multiples-Based) Valuation

• Current Forward P/E: ~26×

• Sector comparisons:

  • Meta is slightly above S&P average (~24×) but below peers like Microsoft (~33×) and Apple (~29×) MoneyWeek.

Relative valuation fair value range:

• ValueInvesting.io pe-based fair => ~$695, indicating potential ~–9% downside Value Investing.

• However, given growth and margins, a justified multiple of ~30× yields a target of ~$830–850.

5. SOTP (Sum-of-the-Parts) Valuation

• Family of Apps (Ads): ~$700

• Reality Labs (XR losses): –$20

• AI & Infra Optionality: +$50

• Net Cash Buffer: +$60 (subtract modest debt if any)

SOTP Indicative Value: ~$790–830

6. Analyst Sentiment & Market Drivers

• AI Investing News: Meta plans to spend over $600 B through 2028 to build infrastructure—an enormous AI push Barron's.

• Engineer Optimism: Ratings remain strong; IBD composite score reached 97/100, with technical buy points near $740 Investors.

• Meta consistently beats revenue and earnings estimates (e.g., Q1 revenue +16%, net income +35%) Financial TimesAP News.

7. Target Price Summary

Valuation MethodTarget Price ($)DCF (Intrinsic) 903-1,264; Multiples-Based830–850S; OTP790–830

Weighted average target price ≈ $911

Current stock price: ~$752 → ~21% upside potential

8. Risks

• Capital Expenditure risk: Massive AI & infra outlays may dent near-term profits.

• Regulatory environment: Ongoing antitrust probe and legal risks in U.S. & EU.

• AI execution uncertainty: Market expectations may outpace realized returns (see CRR model in academic studies on AI valuations) arXiv.

• Macro/Ad Spend Volatility: Trade tensions or budget cuts could impact ad revenue.

9. Investment Thesis

Meta's Q2 financial strength, strong FCF, AI-driven investment strategy, and resilient ad business establish a compelling long-term growth story. Although near-term margin pressure from infrastructure spending exists, the high return profile and AI optionality justify a Buy with a target in the $911.

Disclaimer (Required if Public)

This report is for informational purposes only and does not constitute financial advice. Investing involves risks, including loss of capital. Please consult your advisor before making investment decisions.