I’m going to break down how Meta is transforming its advertising empire thanks to AI. From there, I’ll make the case for why Meta could potentially achieve a $3 trillion market cap within the next two years.<\/p>\n
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Image source: Getty Images.<\/p>\n
How is Meta using AI?<\/p>\n
At the core of Meta’s AI roadmap is a new machine learning product called Advantage+<\/a>. Advantage+ helps marketers automate their ad campaigns, streamlining ad creation and demographic targeting.<\/p>\n The core idea is that AI helps marketers get a better sense of which ads resonate with different customer types. From there, advertisers can strategically allocate their budgets across Meta’s family of apps — Facebook, Instagram, and WhatsApp — depending on what they are trying to sell and to whom.<\/p>\n One thing to know about Advantage+ is that it is a relatively new product that Meta constantly iterates and to which it adds new features. For this reason, management tends to provide sporadic updates on the progress of Advantage+.<\/p>\n Today’s Change<\/p>\n (-1.29%) $-8.50<\/p>\n Current Price<\/p>\n $648.51<\/p>\n Key Data Points<\/p>\n Market Cap<\/p>\n $1.6T<\/p>\n Day’s Range<\/p>\n $638.13 – $649.33<\/p>\n 52wk Range<\/p>\n $479.80 – $796.25<\/p>\n Volume<\/p>\n 1M<\/p>\n Avg Vol<\/p>\n 16M<\/p>\n Gross Margin<\/p>\n 82.00%<\/p>\n Dividend Yield<\/p>\n 0.32%<\/p>\n During the third quarter, Meta CFO Susan Li shared that Advantage+ had reached a $60 billion annual revenue run rate<\/a>. While a new headline figure was not revealed during the fourth-quarter earnings call, Meta’s management shared just enough to imply that its AI efforts are continuing to pay off.<\/p>\n In Q4, Meta’s video generation tools, which are part of the Creative suite underneath the Advantage+ umbrella, hit a $10 billion annual revenue run rate. Growth from this specific segment outpaced the increase from overall ad revenue by 3x quarter over quarter.<\/p>\n In addition, Meta’s next-generation attribution tool drove a 24% increase in incremental conversions compared to the company’s standard model. This new attribution feature has already achieved a multi-billion-dollar annual run rate since its launch seven months ago.<\/p>\n Understanding Meta’s valuation<\/p>\n In 2024, Meta spent $39 billion on capital expenditures (capex). Last year, the company accelerated its spend by 85%, bringing total capex to $72 billion. During the Q4 earnings call, management revealed that Meta could spend up to $135 billion on capex this year — nearly double the amount compared to 2025 levels.<\/p>\n I bring this up because despite the company’s progress on the AI frontier, I think most investors still do not understand how Meta is deploying artificial intelligence<\/a>. Hence, investors are focusing on the effects that rising AI infrastructure costs will have on free cash flow more than anything else. These dynamics are reflected in Meta’s valuation.<\/p>\n Meta currently trades at a forward price-to-earnings<\/a> (P\/E) multiple of 21 — essentially in line with its three-year average. In my eyes, Meta’s forward P\/E reflects some degree of uncertainty driven by skepticism over the company’s rising infrastructure budget.<\/p>\n Can Meta reach a $3 trillion valuation?<\/p>\n As the chart below shows, Meta is valued at a significant discount relative to its hyperscaler cohorts based on forward P\/E. I think there are two factors at play here.<\/p>\n![\"Meta](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/03\/.png\"\/)
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