Analyst Explains How Meta (META) AI Investments are Paying Off

We recently published 10 Stocks to Watch as Investors Scramble to Pour Money into AI Trade. Meta Platforms Inc (NASDAQ:META) is one of the stocks that caught analysts’ attention.

Mark Mahaney, Evercore ISI head of internet research, said in a latest program on CNBC that contrary to some reports, several major companies are starting to see real benefits of their AI spending. To prove his point, the analyst gave the example of Meta Platforms Inc (NASDAQ:META).

“Take Meta, for example. They dramatically improved the user and advertiser experience, which pushed revenue per employee up nearly 70% for them. If you do AI right, if you invest aggressively, you can materially improve monetization. And I’m not talking about cutting costs — I mean boosting productivity and revenue per employee. You don’t normally see that.”

Analyst Explains How Meta (META) AI Investments are Paying Off

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Can Meta Shares Rise on the Back of AI Spending?

With daily active users of about 3.48 billion, Meta’s huge edge in the AI race is the data and user base it has access to, which is extremely useful for ads targeting and monetization.

In 2024, digital advertising accounted for about 98% of the company’s total revenue. The business is thriving for now. In the June quarter, price per ad rose 9% year over year, reflecting higher returns for advertisers and a favorable supply and demand balance for Meta.

However, an overall slowdown in digital advertising and huge spending from the company could limit the stock’s upside. Between 2014 and 2019, digital advertising rose about 20% annually, but growth is now expected to slow to 9% per year from 2025 through 2030.

Meta is expected to spend about $60 billion to $65 billion in 2025 on capital expenditures to expand its artificial intelligence infrastructure. Unlike hardware chip makers like Nvidia, companies like Meta would need to show actual results from their AI spending to unlock more shareholder value in the short term.

Alger Spectra Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its second quarter 2025 investor letter:

“Meta Platforms, Inc. (NASDAQ:META) is the world’s largest social-media company, spanning Facebook, Instagram, WhatsApp and Messenger, and its Reality Labs arm pursues next-generation augmented- and virtual-reality hardware. Its Family of Apps averaged 3.4 billion daily active users in March 2025, highlighting the unrivalled scale that underpins its advertising franchise. The company’s AI powered ad-delivery tools are driving higher pricing and better campaign performance, while new initiatives—such as the rollout of ads in WhatsApp—have the potential to unlock fresh revenue streams and are supported by a cash-rich balance-sheet that now includes a quarterly dividend. Shares rose during the quarter after fiscal first-quarter results came in better-than-expected due to strong revenue growth and operating margin expansion. Additionally, management guided fiscal second-quarter revenue above consensus and trimmed full-year expense guidance even as it lifted capital-expenditure plans to accelerate AI-infrastructure build-out.”

While we acknowledge the risk and potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.