Is META Stock's 24.18X PE Still Worth it? Buy, Sell, or Hold?

Core Insights - Meta Platforms (META) shares are trading at a premium with a forward 12-month Price/Earnings (P/E) ratio of 24.18X, compared to the Zacks Computer & Technology sector's 23.72X [1] - META shares are trading at a premium compared to Alphabet (GOOGL) at 16.26X but at a discount to Amazon (AMZN) at 31.44X; together, these companies are expected to capture about 50% of global ad spending by 2028 [2] Financial Performance - META shares have appreciated 9.2% year to date, outperforming peers like Alphabet and Amazon, which have seen declines of 4.9% and 16.3%, respectively [6] - The Zacks Consensus Estimate for second-quarter 2025 earnings is $5.84 per share, reflecting a 3.2% increase over the past 30 days and a 13.18% year-over-year growth [17] AI and Advertising Strategy - META's focus on AI to enhance user engagement is a significant catalyst, with over 3.43 billion daily users providing a vast data trove; AI usage has reached approximately one billion monthly users globally [5] - The deployment of META's deep neural network on NVIDIA's Grace Hopper Superchip has led to over 6% improvement in ad retrieval recall and more than 8% improvement in ad quality [12] - The introduction of the Generative Ads Recommendation model has increased conversion rates by 5%, with a 30% rise in advertisers using AI creative tools [15] Revenue Growth and Initiatives - META's Family of Apps other revenues grew 34% year-over-year to $510 million in Q1 2025, driven by WhatsApp Business Platform and Meta Verified subscriptions [16] - Capital expenditure for 2025 is projected between $64 billion and $72 billion, primarily for Gen AI initiatives and core business expansion [19] Market Position and Trends - META shares are trading above the 50-day and 200-day moving averages, indicating a bullish trend [9] - The company is focusing on social commerce through platforms like Facebook, Instagram, and WhatsApp, which is expected to enhance revenue streams [16]