<div id="readability-page-1">Meta Platforms (META 0.35%) stock has been in fine form on the market over the past three years, delivering healthy gains of 116% to investors and outperforming the 37% increase in the Nasdaq Composite index during the same period. The tech giant's healthy gains can be attributed to its market share growth in the lucrative digital advertising space, where it is now using artificial intelligence (AI) tools to win a bigger share of customers' wallets. That's a smart thing to do right now as the adoption of AI in marketing is expected to increase at an annual rate of 25% through 2030, according to Grand View Research. However, will AI be enough to drive Meta stock higher over the next three years? Let's find out. <h2>Meta Platforms' AI-driven ad revenue has been picking up</h2> Meta Platforms released its fourth-quarter 2024 results on Jan. 29. The company ended the year with a 22% jump in revenue to $164.5 billion, while earnings increased an impressive 60% year over year to $23.86 per share. The numbers exceeded Wall Street's expectations. The good part is that Meta's AI-focused advertising tools are gaining solid traction among customers. For instance, CFO Susan Li remarked on the company's latest earnings conference call that its Advantage+ platform, which allows advertisers to automate their ad campaigns, witnessed a terrific year-over-year increase of 70% in the fourth quarter. This platform has now exceeded an annual revenue run rate of $20 billion. Meanwhile, Meta is also witnessing a significant jump in the adoption of its Advantage+ Creative platform, which optimizes the images and video using generative AI to help improve audience interaction. It is worth noting that the adoption of Meta's generative AI-powered ad creation tools has jumped fourfold in a matter of just six months. More importantly, Meta has been pushing the envelope to ensure that it can make the most of AI to help increase advertisers' returns on the ad dollars they spend. It launched a new machine learning platform called Andromeda in the second half of last year, developed in partnership with Nvidia. Meta points out that Andromeda's ability to &#34;narrow down a pool of tens of millions of ads to the few thousand we consider showing someone&#34; has led to an 8% increase in the quality of ads that are served to the audience. Not surprisingly, Meta has decided to spend between $60 billion and $65 billion in capital expenditure this year to support its generative AI efforts and the core business. That would be a big increase from last year's outlay of $39.2 billion. However, there have been concerns about the returns that Meta and others, which are spending such big money on AI projects, can generate from these investments. But then, it looks like the money that Meta is spending to bring AI-focused advertising tools to its customers is indeed bearing fruit. This is evident from the 14% year-over-year increase in the average price per ad that Meta charged in Q4. That's a huge improvement over the 2% growth in the average price per ad in the fourth quarter of 2023. So, the better quality of ads and the AI-powered ad creation and optimization tools are probably encouraging advertisers to spend more across Meta's family of apps, and this could lead to healthy bottom-line growth over the next three years. <h2>How much upside can investors expect over the next three years?</h2> We have already seen that Meta delivered impressive earnings growth in 2024. However, analysts are projecting a single-digit jump in its earnings this year to $25.30 per share. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/a5cc2cb962b91186a4d043adb3e3c2a0.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="380" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/a5cc2cb962b91186a4d043adb3e3c2a0.png"/> META EPS Estimates for Current Fiscal Year data by YCharts This slowdown in Meta's bottom-line growth this year can be attributed to the significant increase in its expenses to support its AI-centric efforts. However, we can see from the chart that Meta's earnings growth is expected to accelerate into the mid-teens from next year. Assuming the company manages to achieve $34.08 per share in earnings for 2027 and trades at 33.5 times earnings at that time (in line with the tech-laden Nasdaq-100 index's multiple), its stock price could jump to $1,141 in three years. That would be a 65% jump from current levels (at the time of this writing). Given that Meta is trading at 28 times earnings right now, a discount to the Nasdaq-100, investors are getting a good deal on this stock right now despite the impressive gains that it has clocked in the past three years. Savvy investors, therefore, can consider adding this AI stock to their portfolios because it seems built for more upside. </div>

Where Will Meta Platforms Stock Be in 3 Years?