06-05-2025
User Engagement & AI Fuel Blockbuster Q1 Results for META Platforms Stock
I've been pounding the table on Meta Platforms (META) for years, writing several articles about why it's a screaming buy. Following the stock's steep sell-off last month as tariff-driven fears overwhelmed the market, I took advantage of the situation and continued adding to my long META position.
Protect Your Portfolio Against Market Uncertainty
Meta Platforms (META) price history over the past twelve months
Buying the dip was a great idea, as the social media giant's Q1 earnings blew the doors off expectations last week, forcing analysts to scramble and reprice the stock. Yet, the core story hasn't changed: Meta's growth is relentless, and its shares are ultra cheap compared to recent quarters.
Earlier today, DBS analyst Sachin Mittal maintained his bullish stance on META reiterating a Buy rating with a lowered price target of $608 per share. In a research note, Mittal said that Meta Platforms' strong financial performance and strategic initiatives are the reasons for sustained upside, with AI being the single largest driver of current revenues and future expectations. Importantly, Mittal pointed that 'successful monetization efforts, particularly with its Reels feature, which has seen a substantial increase in user engagement and monetization.'
Sustained Excellence Fuels Revenue Surge
Meta's Q1 was a masterclass in execution, with revenue surpassing $42.3 billion, up 16% year-over-year, smashing estimates by nearly $1 billion. The company's Family Daily Active People (DAP) climbed to 3.43 billion, a 6% jump, reflecting sticky user engagement across Facebook, Instagram, and WhatsApp. This, paired with AI-driven content recommendations, boosted ad impressions by 5%, while average ad prices rose 10%.
Meta Platforms Forecast EPS vs Actual EPS
Management credited AI tools like the Advantage+ suite for sharpening ad targeting, supporting higher returns for advertisers, and fueling engagement. For context, Instagram Reels alone saw 20% year-over-year growth. Meta AI, now with nearly 1 billion monthly active users, is weaving personalized experiences that keep users hooked, directly lifting these metrics.
It would seem Meta's heavy investment in AI infrastructure and models like Llama is the company's 'secret sauce', since they optimize everything from content curation to ad delivery. CFO Susan Li noted on the earnings call that these tools are 'unlocking new levels of efficiency and engagement,' particularly in short-form video and messaging. So the game has shifted from just growing the user base to employing more intelligent systems, making every interaction more valuable, and, in turn, pushing revenue to new heights.
