Why Meta Should Rally All The Way Into 2025

Key Points

• Meta shares are up 70% this year alone.
• Even with those gains, analysts see up to 40% additional upside.
• The stock is on the verge of closing above $600.

It can only be said that shares of Meta Platforms Inc NASDAQ: META are having an absolutely blockbuster year, with gains of up to 70% year-to-date already locked in. This is making Meta one of the best performers among large-cap tech stocks in a year, and that's been good for equities in general. Unsurprisingly, the stock has repeatedly hit all-time highs, with October's record almost broken earlier this month. 

As we head into the final few weeks of the year, there are several reasons investors should be getting excited about what's ahead for the $1.5 trillion tech giant from California. With momentum on its side and a range of growth drivers in place, Meta is shaping up to be a solid bet for 2025 and beyond. Let's jump in and take a look at why investors are so excited. 

Fundamental Performance

To start with, let's take a look at Meta's fundamental performance. The company smashed analyst expectations with its latest earnings report just two weeks ago, posting EPS and revenue figures that came in well above consensus. This is a track record that investors are loving right now, and it's one of the reasons Meta's stock has been doing so well. 

Adding to the bullish thesis, Meta's forward guidance was at the higher end of analyst expectations, a clear sign of confidence heading into the end of the year. There's also the fact that the company has become increasingly diversified in the best possible way.

CEO Mark Zuckerberg spoke to this point specifically when he said, "We had a good quarter driven by AI progress across our apps and business. We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses." This diversification sets Meta apart in a crowded tech space, providing multiple avenues for growth.

Bullish Analyst Updates

Adding to the excitement is that Meta's upward trajectory has not gone unnoticed by analysts. Multiple bullish updates from analysts in the past few weeks suggest that even with nearly 2 years of gains under its belt, the stock still has a lot of room to run. 

For example, the teams at JMP Securities, Citigroup, UBS Group, and Susquehanna, among many others, all issued Buy or equivalent ratings in the aftermath of last month's report. In a field of bulls, Rosenblatt stands out with its street-high price target of $811, which, from where the stock closed on Wednesday night, points to an eye-watering 40% targeted upside.

Potential Concerns

However, not every analyst is sold on Meta's prospects for continuing rallying. Last month, the team at HSBC initiated coverage on Meta with a Neutral rating right before the report was released, while BMO Capital Markets did the same after the release. Needham & Company even went one further and rated Meta as Underperform. 

The primary concern among these analysts is Meta's rising expenses. Like many other tech giants, Meta's spending on AI, virtual reality, and the metaverse has surged over the past year. While these investments are expected to pay off long-term, they could place pressure on margins and profitability in the short term. After nearly two years of near-continuous gains, it's natural for some to suggest a degree of caution, but these voices remain in the minority.

Getting Involved

Despite these cautionary notes, Meta is a stock worth watching closely for those of us on the sidelines. Its shares are in a super strong uptrend, the fundamentals are ticking over nicely, and analysts are almost unanimous in their praise and bullish outlook. 

The cherry on top is the fact that the stock's Relative Strength Index (RSI), a momentum indicator, is sitting right now at a very comfortable 52. This suggests that there's plenty of room for Meta shares to move upward in the coming weeks before anyone could call them overbought. Investors should look for the stock to close above $600 in the coming sessions, as this would confirm that the rally's next phase has begun.