The last Meta platform rally ended its market cap near the $ 2 trillion brand.
The upcoming report on the profits of the digital advertising giant can help him hit this milestone.
Meta’s ability to deliver a strong return to advertisers with the help of AI tools can help it grow at a faster rate than the final market in the long run, making the way to more upwards.
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Meta platforms(Nasdaq: Meta) The shares are impressive for late, accumulating over 32% in the last three months against the background of a broader rally in technological stocks. As a result, the Meta market cap has jumped to $ 1.8 trillion from this writing on July 14, making it the sixth largest company in the world.
Meta is planned to release its results from the second quarter after the market closed on July 31. The company managed to grow at a faster rate than the digital advertising market thanks to the integration of artificial intelligence tools (AI) into its offers, which may allow it to give another solid set of results later this month.
Given that Meta’s shares are only 11% of the entry into the $ 2 trillion market cap, as I write this, there is a great chance of achieving this cornerstone in July, led by a technology rally and a healthy three -month report.
Meta data from ycharts. E = profit reports.
Let’s look at the reasons why Meta Stock is prepared for more up this month and in the long run.
It is worth noting that Meta’s revenue was better than the expectations of consensus in each of the last four quarters. One of the reasons is the increase in costs in his family from apps by advertisers. In the first quarter, for example, META reported an impressive 10% increase compared to the year in the average price of AD.
Image source: Getty Images.
Advertising impressions also increased by 5% from a year ago, which means that the company supplies more ads. This combination of higher AD pricing and increasing the delivered impressions has enabled 37% to increase its profit to $ 6.43 per share over Q1. However, investors should also point out that the company aggressively increases its capital costs to increase its infrastructure.
He expects to spend $ 68 billion on Capex in 2025, at the middle point of his or her orientation range. This would be a huge increase over his 2024 Capex of $ 39 billion. This explains why analysts expect Meta profits to increase at a slower annual rate of 13% in the second quarter to $ 5.84 per share. Although the increased investment in AI infrastructure focused on AI is undoubtedly likely to weigh in the lower row of META in the short term, the higher return that its investments from AI are generated on the advertising front can help it overcome the most important expectations of the market. And beating expectations often sends shares, as investors respond with excitement and optimism.
Meta Management indicates that users now spend more time on their applications thanks to the AI recommended content. At the six months ended on March 31, Meta saw the time spent on Facebook and Instagram increased by 7% and 6% respectively. Increasing users’ engagement tells us why she has been able to serve more ads.
In addition, profit advertisers have seen about the dollars they spend on Meta apps are also quite solid. A few months ago, Meta said “evaluated the impact of [its] The new AI -managed promotional instruments have found that they have achieved a 22% improvement in the return of advertiser costs for advertisers. This means that for every dollar that US advertisers spend with meta, they see a return of $ 4.52 when they use [its] New advertising tools managed by AI. “
Not surprisingly, META showed a 30% increase in the number of advertisers using their AI tools to create campaigns in the first quarter. So, there really is a solid META capability to watch a healthy growth clock for ads and the average price of AD via Q2, which can pave the way for a better than expected jump in its bottom row and help the company pass the main moment of $ 2 trillion. I expect to hit this market cap before August 1st.
Looking forward, Meta expects to allow advertisers to fully automate the creation and implementation of advertising campaigns by the end of next year. As such, there is a great chance that the growth of Meta profit will be accelerated since 2026 after predicting an increase of 7%this year. The evaluations are shown in the diagram below.
Meta EPS estimates of current fiscal year data from Ycharts. EPS = Profit per share.
However, there is a great opportunity to grow Meta’s profits to outstrip market expectations thanks to AI. Therefore, it will not be surprising to see that its market cover jumps to higher levels in the long run, as the digital advertisement market is expected to clock at a stable annual growth degree to 15% to 2030, and META has the ability to continue to grow at a faster rate than the final market.
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Randy Zuckerberg, a former director of the Facebook Development Market and a sister of Meta Platforms CEO Mark Zuckerberg, is a member of the Board of Directors of Motley Fool. Harsh Chauhan has no position in any of the mentioned shares. Motley Fool has positions and recommends meta platforms. Motley Fool has a policy of disclosure.
Forecast: This shares of artificial intelligence (AI) can reach an estimate of $ 2 trillion until July 31, originally published by Motley Fool
