Why is Meta Platforms, Inc. stock outperforming the market?

Meta Platforms, Inc. reported impressive fourth-quarter 2024 financial results, surpassing analyst expectations with a revenue of $48.39 billion and earnings per share of $8.02. This represents a 21% year-over-year increase in total revenue. The company also saw a 5% growth in daily active users to 3.35 billion, a 6% rise in ad impressions, and a 14% increase in the average price per ad. Despite these strong results, Meta's first-quarter 2025 revenue guidance fell below Street expectations, with projections between $39.5 billion and $41.8 billion. Capital expenditures for 2025 are expected to be between $60 billion and $65 billion, marking a 60% year-over-year growth, driven by investments in generative AI and core business areas. Analysts have mixed views on Meta's future prospects. While some, like Andrew Boone from JMP Securities and Barton Crockett from Rosenblatt, are optimistic about Meta's AI investments enhancing ad relevance and unlocking new services, others express concern over the rapidly increasing capital expenditures and their potential impact on free cash flow and margins. Meta's stock has seen positive movement post-earnings, with several firms raising their price forecasts. Analysts such as Brad Erickson from RBC Capital and Eric Sheridan from Goldman Sachs view Meta's AI spending plans and new product drivers as positive for future growth. However, concerns remain about decelerating revenue and EPS growth, as highlighted by Laura Martin from Needham. Overall, Meta's quarter reflects strong advertising revenue and strategic AI investments, with a focus on long-term growth despite rising expenses.