Should You Buy Meta Platforms Stock Before Oct. 29?

Meta Platforms (META) is approaching its next earnings report with strong H1 2025 financial performance, including a 19% revenue increase to $90 billion and a 36% net income surge to $35 billion, primarily driven by its dominant advertising business. Concurrently, the company is making substantial long-term investments in AI, with planned 2025 capital expenditures of $66-$72 billion, even as its Reality Labs segment currently contributes less than 0.9% of total revenue. Despite potential short-term volatility, Meta's relatively low P/E of 26 and its robust core business, coupled with its aggressive AI pivot, position it as a reasonably priced stock with significant long-term growth potential.

Analysis

Meta Platforms is approaching its upcoming earnings report with robust financial performance, having reported a 19% year-over-year increase in overall revenue to $90 billion and a 36% surge in net income to $35 billion for the first half of 2025. This growth was predominantly fueled by its advertising business, which accounts for 98% of total revenue, alongside effective cost management. Concurrently, Meta is executing an aggressive strategic pivot into Artificial Intelligence, committing between $66 billion and $72 billion in capital expenditures for 2025 to train AI models using its extensive data.

Despite these substantial AI investments, the Reality Labs segment, which includes AI and VR products, generated only $782 million in revenue during H1 2025, representing less than 0.9% of total revenue and experiencing a slight decline. This indicates that while the core advertising business remains highly profitable, the financial impact of Meta's AI initiatives is still in its nascent stages. The company's P/E ratio of 26 is notably low among the Magnificent Seven, with only Alphabet's P/E of 25 being lower, suggesting a potentially undervalued stock given its strong profit growth.

The company's history shows significant stock volatility around earnings announcements, with a 20% gain in February 2024 and a 25% loss in October 2022. This underscores the potential for short-term price fluctuations around the October 29 earnings report, despite a generally bullish long-term outlook driven by the anticipated transformation of its value proposition through AI. The long-term success hinges on Reality Labs eventually becoming a significant revenue driver.

Key Decisions for Investors

• Investors should consider initiating or adding to long-term positions in Meta, capitalizing on its strong core advertising business and significant strategic investment in AI, which presents a favorable risk-reward profile at its current P/E of 26.
• Given the historical volatility surrounding Meta's earnings reports, investors should exercise caution and consider staggering their investment, potentially allocating no more than half of their intended capital before the October 29 earnings announcement.
• Closely monitor the upcoming earnings report for insights into Reality Labs' revenue growth and the efficiency of the substantial AI capital expenditures, as these will be key indicators of the long-term success of Meta's strategic pivot.