In the wave of AI, Meta's stock price has risen for 16 consecutive days. Will it become a new member of the 2 trillion dollar club?

Even in a market rewarding winners in artificial intelligence, the stock performance of Meta (META.US) stands out. Noticeably, Facebook's parent company has experienced a record-breaking 16-day consecutive rise in its stock, driven by various news, including those putting pressure on other large tech companies, resulting in its market value reaching nearly $2 trillion for the first time. Conrad van Tienhoven, portfolio manager at Riverpark Capital, stated, "I have long believed Meta, aside from NVIDIA Corporation, to be the biggest beneficiary of AI, and I think more and more people are starting to accept that view." Companies like Microsoft Corporation and Alphabet are facing questions on when they will see the significant return on their investments in AI, "Meta's investment in AI solutions has already had an immediate impact on its advertising positioning and measurement, resulting in faster growth and higher average revenue per user." According to data compiled by Bloomberg, this stock's consecutive rise marks the longest one among Nasdaq 100 constituents since 1990. During this time, the stock has risen by over 17%, with a market value exceeding $1.8 trillion. Nonetheless, it remains one of the cheapest large tech stocks. The continuous appearance of catalysts is eye-catching. In January this year, CEO Zuckerberg announced that the company plans to invest up to $65 billion in AI projects by 2025, far exceeding expectations. While capital expenditure plans face more scrutiny, Meta's goals strengthen the impression of investing from a position of strength. Despite the impact of Chinese AI startup DeepSeek on the tech industry, claiming strong performance and lower costs with fewer chips needed, Meta's stock has risen. Investors see DeepSeek's success as validation of open-source models, with Meta's Llama being one that adopts this model. The company's financial reports show that AI is improving its ad targeting, benefiting billions of users. Zuckerberg stated that 2025 will be a "very important year" for AI. Subsequently, Meta started informing employees of layoffs on Monday to focus on AI talent. Zuckerberg has also made some high-profile changes to better align Meta with the Trump administration. The stock's continuous rise began before the inauguration ceremony in January. The recent strong performance contrasts sharply with Alphabet, another major online advertising company, whose disappointing financial reports have led to a decrease in its stock price this year, while Meta has risen by about 23%. "Meta is leading competitors in proving that their significant capital expenditure on AI is paying off, which is why investors continue to favor it," said Jim Polk, equity investment head at Homestead Advisers. "It has already demonstrated how AI is impacting user engagement and profitability, while Alphabet still needs to prove the effectiveness of its capital expenditure and that its market share in search will not be eroded." Data shows that Meta's revenue growth is expected to increase by nearly 15% in 2025, with a slight slowdown in the following years. However, net income growth is forecasted to accelerate from 6.2% this year to 15% in 2026. Meta's remarkable continuous rise in stock has pushed its 14-day relative strength index to around 80, significantly above the level of 70, indicating the stock may be overbought. The stock saw a slight decline in pre-market trading on Tuesday. However, despite the continuous rise in stock, Meta's valuation does not seem particularly high. The company's current price-earnings ratio is 27 times, the highest level since 2020, but in line with the Nasdaq 100 index. Among the "Big Seven Techs," only Alphabet has a lower price-earnings ratio. "It is in algorithm heaven, as it is one of the few big stocks that performed perfectly in the last quarter," said Rhys Williams of Wayve Capital Management. "The models really like stocks with solid fundamentals and reasonable valuations." The current success of Meta marks a dramatic turnaround from a few years ago when the stock plummeted due to the company's shift towards the metaverse, changes in Apple Inc.'s privacy policies weakening Meta's ad targeting capabilities, and unfavorable user trends, especially in the face of TikTok competition. These concerns have been alleviated. Meta's investment in AI has offset the impact of Apple Inc.'s policies and increased user engagement. Although TikTok remains a significant competitor, its future in the U.S. remains uncertain as a potential ban might take effect before early April. "I doubt the market is pricing in a ban on TikTok in the U.S. currently, but if the ban goes through, this would be a huge positive for Meta," Polk said. "I'm not sure how likely that is, but it could further drive up the stock price."