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Social media titan Meta Platforms (META) is back in the headlines, all thanks to its rapidly expanding ambitions in the world of artificial Intelligence (AI). Reports claim that Meta is closing in on a massive investment, potentially committing $15 billion to the promising AI startup, Scale AI. If this is finalized, it would be Meta’s largest-ever external investment, giving it a 49% stake in the startup. Meta is also apparently working to assemble a team of 50 people for a new “superintelligence” AI team related to the Scale AI investment.
Founded in 2016 by Alexandr Wang, Scale AI has quickly become a crucial player in the red-hot generative AI landscape. The startup specializes in providing essential data labeling services, which are vital for industry giants such as Microsoft (MSFT) and OpenAI to effectively train their machine learning models. Interestingly, this massive investment would mark a significant departure from Meta’s usual playbook.
Unlike competitors such as Microsoft, Amazon (AMZN), and Google’s parent Alphabet (GOOGL), who often channel billions into AI startups like OpenAI and Anthropic, Meta has traditionally favored in-house research, coupled with a more open development strategy, to fuel improvements in its AI technology. Since Meta doesn’t have a cloud infrastructure business, the precise structure of this potentially groundbreaking investment remains a mystery for now.
So, with excitement swirling around Meta’s pending investment in Scale AI, should investors buy, sell, or hold Meta shares now?
About Meta Stock
California-based Meta Platforms (META) has evolved significantly since Facebook changed the way the world connects back in 2004. Now home to social media platforms such as Instagram, WhatsApp, and Messenger, Meta continues to influence how people stay in touch. These days, the company is busy exploring new territory in AI, as well as augmented and virtual reality, with the goal of reshaping digital interactions once again.
With a hefty market cap of around $1.8 trillion, Meta has proven its resilience in 2025, even as market volatility weighed on much of the tech sector. While many of its fellow “Magnificent Seven” peers have struggled to stay in the green this year, Meta has bucked the trend, emerging as the group’s top performer with an 19.8% gain YTD. That’s well ahead of the broader S&P 500 Index’s ($SPX) modest 2.6% rise.
Take a wider view, and Meta’s momentum becomes even more striking. Over the past year, the stock has surged 40%, outshining the broader market’s 12.3% return.
Given Meta’s strong reputation and impressive stock performance this year, it’s no shocker that its shares aren’t exactly cheap compared to the broader industry. Meta currently trades at 27.33 times forward earnings, which is well above the sector median of 13.59x. But when stacked up against other “Magnificent Seven” heavyweights, Meta’s valuation starts to look more reasonable.
Tech giant Microsoft, for example, trades at 35.28 times forward earnings, and chip powerhouse Nvidia (NVDA) sits at 35.42x. So while Meta isn’t a bargain-bin pick, its pricing looks relatively balanced for a company with its scale, momentum, and growth ambitions.
Inside Meta’s Q1 Earnings Report
Following Meta’s first quarter earnings report published on April 30, which blew past both Wall Street’s top and bottom line forecasts, shares of the social media giant closed up roughly 4.2% in the very next trading session. Sales for the quarter shot up 16% annually to $42.3 billion, surpassing Wall Street’s forecasted figure of $41.4 billion. Bottom line growth was even more impressive, with EPS climbing a notable 37% year over year to $6.43 per share, topping estimates by an impressive 23.2% margin.
Meta's advertising business has demonstrated remarkable resilience, showcasing robust growth in key metrics. Ad impressions saw a 5% increase year-over-year, while the average price per ad experienced a significant 10% rise. Beyond just ads, user engagement across Meta's apps remains exceptionally robust.
In March 2025, the company's family of apps hit 3.4 billion daily active people, marking a healthy 6% jump from the previous year. Moreover, the company's operational efficiency was also evident, as its operating margin improved to 41% from 38% in the same quarter of the previous year, reflecting effective cost management.
CEO Mark Zuckerberg further emphasized the company's significant progress on its AI initiatives, particularly highlighting AI glasses and Meta AI, which now boasts nearly 1 billion monthly active users. The CEO stated, “We've had a strong start to an important year, our community continues to grow and our business is performing very well.”
Looking ahead, Meta is painting a bright picture for the second quarter, with an optimistic revenue projection of $42.5 billion to $45.5 billion. The company has also increased its fiscal 2025 capital expenditure outlook to range between $64 billion and $72 billion, up from the previous range of $60 billion to $65 billion. This boost signals a strategic intensification of Meta’s AI efforts. The company is channeling more capital into additional data center investments, which are crucial for powering its advanced AI initiatives.
What Do Analysts Expect for Meta Stock?
Overall, Wall Street is flashing the green flag for META, with a “Strong Buy” consensus reflecting widespread optimism about the stock’s growth prospects. Of the 53 analysts offering recommendations, 44 are giving it a solid “Strong Buy,” three suggest a “Moderate Buy,” four give a “Hold,” and only two advocate “Strong Sell.”
META’s average analyst price target of $698.42 is slightly below its current trading price. However, the Street-high price target of $935 suggests that the stock can still rally as much as 34% from here.
While Meta and Scale AI are yet to officially confirm the swirling rumors, Meta’s monumental capital expenditure commitment for this year and its rapid advancements in AI clearly underscore its unwavering dedication to strengthening its AI capabilities. Additionally, given its recent stronger-than-expected financial performance and Wall Street’s resounding confidence in the company, it would be wise for investors to start paying close attention to the stock now.
