<div id="readability-page-1"><p>Share prices of <strong>Meta Platforms</strong> <span>(META<span> 2.65%</span>)</span> reached an all-time high of $740.89 on Feb. 14. Despite new artificial intelligence (AI) capabilities powering strong growth and earnings momentum, the Valentine's Day peak quickly turned into heartbreak for investors. As of this writing, the stock is down nearly 26% amid concerns regarding the strength of the U.S. economy.</p> <p>Even with the recent sell-off, the stock remains a massive long-term winner, returning more than 188% over the past five years. Does Meta's recent weakness represent a buying opportunity for an industry leader trading at a discount, or does it signal the potential for further downside?</p> <p>Let's explore how the rest of 2025 could play out for this social media and AI giant.</p> <h2>AI leadership from Meta Platforms</h2> <p>Meta's AI leadership is aided by its unparalleled access to interactions and data from over 3.35 billion daily active users across its Facebook, Instagram, and WhatsApp social media sites.</p> <p>This vast dataset gives Meta a significant edge in training AI models like Llama 4, enabling innovative ad targeting that is already proving effective at boosting conversion rates. This, in turn, drives demand for new ad spending on its platform, fueling growth.</p> <p>Moreover, Meta's AI-powered tools are designed to enhance user engagement across its platforms. By leveraging machine learning algorithms, Meta personalizes content feeds, keeping users connected and active on its sites while providing valuable insights for advertisers.</p> <p>The trends are impressive. In 2024, Meta's annual revenue surged 22%, and record earnings per share (EPS) of $23.86 marked a 60% increase. Beyond the current stock market turbulence, all indications are that Meta's operational and financial strength is as robust as ever.</p>  <h2>Previewing Meta's Q1 earnings</h2> <p>Anticipation is building for Meta's first-quarter 2025 earnings report, set for release on April 30.</p> <p>According to Wall Street analysts tracked by Yahoo! Finance, the company is expected to report revenue growth of around 13.5% year over year, alongside earnings per share (EPS) of $5.22, representing a 10.8% increase from the prior-year quarter. This trajectory is solid given the exceptional comparison baseline from last year.</p> <p>Beyond the Q1 headline numbers, investors will be keenly focused on any signs of a slowdown in user engagement or advertising spending. Although Meta isn't directly impacted by the recent changes in U.S. trade policy, economic disruptions from new tariffs on goods may cause businesses to reassess their marketing budgets and investment plans, potentially limiting Meta's ad revenue opportunities.</p> <p>CEO Mark Zuckerberg's comments will be closely watched, with the potential for updated full-year guidance on Meta's intensive capital expenditures, forecast between $60 billion and $65 billion to support its AI infrastructure buildout. One advantage Meta has is its flexibility to adjust spending plans according to evolving market conditions. If top-line revenue slows, Meta may have room to manage expenses in order to maintain profitability.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTU4MzEvbWV0YS1zdG9jay1haS1sZWFkZXItMjAyNS1vdXRsb29rLWJ1eS5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTU4MzEvbWV0YS1zdG9jay1haS1sZWFkZXItMjAyNS1vdXRsb29rLWJ1eS5qcGcmdz03MDA"/></p><p>Image source: Getty Images.</p> </div> <p>Since 2022, when Meta faced financial stress and a 41% decline in earnings, the company has implemented significant cost-saving initiatives, including a reduced employee headcount. These changes have streamlined Meta's operations, making it more efficient and resilient to economic shifts. As a result, confidence in its cash flow and earnings trajectory remains high, with expectations for double-digit growth.</p> <p>Given this outlook, Meta's current valuation appears attractive, with shares trading at a forward price-to-earnings (P/E) ratio of 21 times its 2025 consensus EPS estimate. This is below the company's five-year average P/E of around 27, suggesting the stock may be undervalued, as the AI strategy warrants a higher valuation premium.</p> <p>If market concerns over tariffs and recession fears subside, Meta's stock is poised to rebound and potentially even outperform the market to the upside.</p> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/ce212d2bf0e17086662587c0f2b2c232.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="456" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/ce212d2bf0e17086662587c0f2b2c232.png"/></p> <p>Data by YCharts.</p> <h2>My take: Buy the dip in Meta Platforms</h2> <p>Recognizing the numerous macroeconomic uncertainties in this historically volatile market, I'm confident Meta Platforms is positioned to emerge stronger. The company offers a compelling blend of growth and value, particularly as a proven tech and AI leader. A solid Q1 earnings report could be the spark for a sustained stock price rally through the rest of 2025.</p>                                                                            </div>

Meta Platforms Stock Is Down 28% From Its Peak. Here's How the Rest of 2025 Could Play Out for This AI Stock.