Eighteen months ago Mark Zuckerberg declared last year was the company’s “year of efficiency.” Today the conversation has shifted from belt‑tightening to bandwidth, specifically, how much compute power, ad inventory, and cash Meta can deploy before July 2026.
The stock closed most recently above $700 per share after nearly doubling since the start of 2024, so the obvious question is whether anything is left in the tank. Dig into the numbers, though, and you’ll uncover several green shoots, and a few land mine, that most headlines still miss.
An AI Super‑Cluster Few Investors Appreciate
Meta now runs one of the world’s three largest AI clouds. Management confirmed the company will control about 350,000 Nvidia H100 GPUs by year‑end, part of a fleet equivalent to 600,000 H100s when older chips are factored in.
At list prices that’s more than $14 billion of silicon, yet Meta insists it will come in under its $35‑40 billion 2025 capex budget, thanks to early supply‑chain commitments struck in late 2023.
The compute is already training Llama 4, a multimodal model whose smallest “Scout” variant uses 17 billion active parameters with 16 experts, allowing near‑GPT‑4 class performance while running on‑device. Open‑sourcing that stack has two hidden benefits which are firstly developer lock‑in at zero acquisition cost. More than 30,000 GitHub repos now reference Llama weights, seeding future enterprise business for Meta’s inference endpoints.
And secondly, an advertising flywheel because internal tests show Advantage+ creative built with Llama‑generated product catalogs raises return‑on‑ad‑spend 12 % versus human‑written copy.
Those subtleties rarely make sell‑side models, yet they convert raw GPU spend into monetizable engagement.
The Ad Engine Is Quietly Hitting New Highs
Family‑of‑Apps operating income reached $21.8 billion in Q1 2025, good for a 52 % margin even after AI infra depreciation.
Two datapoints most investors miss are advantage+ adoption is exploding. Usage of fully automated shopping campaigns jumped 70 % year‑over‑year in Q4, and Advantage+ products now touch a $20 billion annual revenue run rate. electroiq.com
And also engagement is still climbing. AI‑curated feeds pushed time spent up 7 % on Facebook, 6 % on Instagram, and an eye‑popping 35 % on Threads.
With click‑through rates rising, Meta raised Q2 revenue guidance to $42.5–45.5 billion. That midpoint implies high‑teens growth despite tougher comps and regulatory ad labeling.
WhatsApp Gone From Sleeping Giant to Revenue Driver
WhatsApp just crossed 3 billion monthly users, matching Facebook itself. Meta finally flipped the monetization switch so display ads will appear in the Updates tab later this year.
Business messaging fees already generate an estimated $3.6 billion in annual spend, up from just $38 million six years ago.
Average revenue per user for WhatsApp Business is still only $0.26, one‑tenth of Facebook’s ARPU, leaving enormous headroom.
Even a modest ARPU lift of $0.10 would add roughly $300 million in incremental top‑line, with near‑100 % incremental margin because the infrastructure is already built.
Reality Labs Is Bleeding Cash, Building Optionality
The VR/AR division lost $4.2 billion in Q1 alone. Bears rightly bemoan the red ink, yet two nuggets go overlooked, the first being the Quest 3 sales mix. Meta disclosed that 30 % of Quest 3 buyers are first‑time headset owners, expanding the addressable base for a future Quest 4 launch expected next spring.
In addition, there’s the issue of Ray‑Ban Meta glasses retention. Internal data show a 70 % seven‑day retention rate for Meta AI voice queries on the glasses, higher than Reels’ early‑days retention, hinting that lightweight AR could monetize through search sponsorships.
If next‑gen smart glasses cannibalize only 5 % of smartphone search minutes, Meta could knife into Google’s core moat.
Dividends and Buybacks on Overdrive
Meta announced a 5 % dividend hike to $0.525 per quarter in May. At the same time, the board topped up its repurchase authorization by $50 billion, bringing total dry powder for buybacks above $80 billion.
With $65 billion in cash and just $18 billion of long‑term debt, the company can keep shrinking the float even while writing nine‑figure checks for GPUs.
Valuation Snapshot
For a company growing revenue ~19 % and EPS ~47 % year‑over‑year, a 28× trailing multiple does not look stretched, especially given the buyback that slices the denominator every quarter.
Scenario Map for July 2026
Price targets derive from consensus peer multiples with a 10 % AI leadership premium.
Catalysts Wall Street May Underestimate
Meta AI Agents roll out as shopping concierges inside Messenger and Instagram DM. Early tests show a 6 % lift in cart‑conversion for SMB advertisers.
Blackwell GPU wave arrives in Q4 2025, potentially doubling Llama inference throughput and halving unit cost.
Digital Services Act compliance pivot. Meta’s decision to offer ads‑free paid tiers in Europe could create a high‑margin subscription leg if even 2 % of EU users pay €9.99.
Threads monetization. The text network now boasts 200 million users and 100 million DAUs; adding Reels ads could turn it into a $2 billion business inside 12 months.
Risks That Could Clip the Wings
Regulatory showdowns pose a problem, specifically the FTC trial over social‑networking monopoly kicks off in April 2026; forced divestitures would shatter the base case.
Capex overruns are another worry if GPU prices stay inflated, 2025 capex could bust the $40 billion ceiling, denting free cash flow.
The generative‑AI arms race should be pause for thought too. OpenAI’s rumored GPT‑5 or Google’s Gemini Ultra 2 might steal developer mindshare, eroding Llama’s network effects.
Where Will Meta Stock Trade 1 Year From Now?
Meta enters the next 12 months with a top‑three AI infrastructure stack already converting capex into ad targeting gains as well as WhatsApp and Threads finally poised to monetize audiences larger than any U.S. cable network.
In addition, a capital‑return engine powerful enough to reduce shares outstanding even while funding moon‑shot hardware.
Blend those ingredients and the most probable landing zone is the base‑case $775, roughly 8 % upside plus a modest dividend. Yet unlike in 2022, downside appears cushioned by net cash and buybacks, while upside could accelerate if Meta figures out how to make billions from messages and glasses no one else can match.
In short, the question may no longer be whether Meta deserves a Magnificent Seven seat, but whether investors have fully digested just how much AI leverage sits inside Menlo Park’s sprawling data halls. One year from now, the answer should be staring back from the ticker tape.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.