Meta Platforms Just Landed a U.S. Army Deal. Should You Buy META Stock Here?
The tech stock went public in May 2012 and has returned more than 1,600% to shareholders since its initial public offering. Let's see if Meta stock is still a good buy in June 2025.
Meta Platforms Continues to Expand Its Product Portfolio
Last week, Meta and Anduril announced a partnership to develop augmented and virtual reality technology for the U.S. Army, marking a significant collaboration between the social media giant and Palmer Luckey's defense-tech startup.
The partnership represents Meta's major push into government technology supply and a reunion with Luckey, who sold Oculus to Meta for $2 billion in 2014. The companies are developing EagleEye, a sensor-enhanced system that enhances soldiers' hearing and vision capabilities.
They've jointly bid on an Army VR contract worth up to $100 million and plan to proceed with their partnership regardless of the contract outcome. The partnership follows Meta's November decision to make its Llama AI models available to government defense and national security applications.
Anduril previously took over Microsoft's (MSFT) AR headset program with the Army in February and recently partnered with OpenAI on AI initiatives for national security missions. The companies position their collaboration as helping maintain America's 'technical edge' while potentially saving billions through dual-use commercial technology.
Meta Posts a Strong Performance in Q1 2025
In Q1 2025, Meta increased sales by 16% year over year to $42.3 billion as the tech heavyweight showcased a successful transformation into an AI-first organization. Meta AI now serves nearly 1 billion monthly active users, making it the most widely used AI assistant globally.
Chief Product Officer Chris Cox highlighted that improvements to recommendation systems have increased time spent on Facebook by 7%, Instagram by 6%, and Threads by an impressive 35% over the past six months. These engagement gains directly translate to enhanced monetization opportunities.
Meta's advertising business benefits significantly from AI-powered improvements. The new Generative Ads Recommendation Model (GEM) has increased conversion rates by 5% on Facebook Reels, while 30% more advertisers are now utilizing AI creative tools. Meta's advertising revenue reached $41.4 billion, driven by improved targeting capabilities and AI-generated creative content.
Meta's infrastructure investments reflect its commitment to maintaining its leadership in AI. The company raised its 2025 capital expenditure guidance to $64 billion to $72 billion, primarily for data centers and AI infrastructure. This includes plans for a 2-gigawatt data center to support frontier model training and development.
Beyond core platforms, Meta's hardware initiatives show promise. Ray-Ban Meta AI glasses have seen a threefold increase in sales, demonstrating strong market demand for AI-enabled wearables. Meta's custom silicon efforts through MTIA are reducing inference costs for recommendation systems, with plans to expand into training workloads.
Meta's open-source Llama models have achieved over 800 million downloads, establishing the company as a leader in accessible AI development while attracting top-tier talent and fostering ecosystem growth that ultimately benefits Meta's broader AI strategy.
Is META Stock Overvalued?
Analysts tracking Meta expect sales to rise from $164.5 billion in 2024 to $288 billion in fiscal 2029. Comparatively, adjusted earnings are forecast to expand from $23.86 per share to $41.38 per share in this period.
Today, META stock trades at a forward price-earnings multiple of 25.5x, in line with its 10-year average. If the stock is priced at 20x forward earnings, it will trade around $830 in early 2029, indicating upside potential of nearly 25% from current levels.
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