The Motley Fool·2025-10-09 08:46Core Viewpoint - Meta Platforms is positioned to outperform Palantir Technologies due to its extreme profitability, disciplined capital return program, and attractive valuation [2][14] Financial Performance - Meta's Q2 revenue increased by 22% year over year, with operating income rising by 38% and operating margin expanding to 43% from 38% a year ago [4] - Net income surged by 36% to over $18 billion, with earnings per share reaching $7.14, up from $5.16 in the same quarter last year [4] - Daily active users across Meta's apps grew by 6%, ad impressions rose by 11%, and price per ad increased by 9%, indicating balanced growth in engagement and monetization [5] Competitive Advantage - Meta has demonstrated a strong competitive advantage through its ability to quickly adapt and replicate successful features, reducing the market share gains of potential disruptors [6][7] Capital Returns - In Q2, Meta repurchased approximately $9.8 billion in stock and paid about $1.3 billion in dividends, with a 5% increase in the quarterly dividend to $0.525 [8] - Meta's cash, cash equivalents, and marketable securities totaled about $47 billion at quarter-end, allowing for continued investment in infrastructure despite high capital expenditures [9] Valuation Comparison - Meta's price-to-earnings ratio is in the mid-20s, which is reasonable given its revenue growth exceeding 20% and operating margin over 40% [12] - In contrast, Palantir has a significantly higher price-to-earnings ratio in the hundreds and a price-to-sales ratio exceeding 137, indicating limited room for disappointment [12]