Meta Platforms is ramping up data center and AI investments. Is the ...
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Meta Platforms (NASDAQ: META) rocketed 4.2% higher on Thursday in response to strong first-quarter earnings. The stock has erased almost all of its year-to-date losses in recent weeks.
Financial Performance
Meta delivered 16% higher revenue, with operating income soaring 27%. The company finished the quarter with a sky-high operating margin of 41%, a testament to its strong business model.
Profitability is driven by user engagement, attracting advertisers. Meta's family daily active people (DAP) metric rose 6% year over year, supporting increases in ad impressions and price per ad.
The company's outlook and confidence in its long-term investments are encouraging, with Meta guiding for $42.5 billion to $45.5 billion in Q2 2025 revenue. It is also increasing its full-year 2025 capital expenditures to focus on AI and core business needs.
Investments in AI
Meta is investing heavily in artificial intelligence (AI) and infrastructure improvements to scale up its AI services. Management highlighted the positive impact of AI on user engagement and advertising customization.
The Reality Labs division focuses on virtual reality, augmented reality, and the metaverse. While the division operates at a loss, Meta's core business performance offsets these losses.
Meta continues its aggressive buyback program and dividend payments, returning a significant amount of capital to shareholders. Buybacks have contributed to earnings growth and kept the stock's valuation reasonable.
Conclusion
Meta Platforms stands out as a top growth stock with a strong business model, investments in AI, and strategic capital allocation. It remains a compelling choice for growth and value investors.
