The American economy has produced the world’s most valuable companies for more than a century. United States Steel was the first company to reach a $1 billion valuation in 1901, and 117 years later, Apple became the first company to exceed a $1 trillion valuation.
Apple was also the first company to surpass the $2 trillion mark And $3 trillion thresholds. Only three other U.S. companies — Microsoft, NvidiaAnd Alphabet — are estimated at over $2 trillion at the time of writing, but I believe there is another one to come.
Meta platforms (NASDAQ: META) is the parent company of popular social networks Facebook, Instagram, Messenger, Threads and WhatsApp, but it is also becoming a serious contender in the artificial intelligence (AI) race. Meta uses AI to improve monetization on its social platforms, but it also developed the world’s most advanced open-source large language model (LLM) called Llama.
This would allow Meta to reach a valuation of $2 trillion within three years. If it does, investors who buy the stock today could earn a 67% return.
AI transforms Meta’s core business
Meta serves more than 3.2 billion people every day through its family of apps. Social networks like Facebook and Instagram used to be about connecting users with their friends and family, but they’ve transformed into entertainment platforms with AI-powered recommendation engines that ensure everyone sees the most relevant content, even if it’s not posted by someone they know.
CEO Mark Zuckerberg says this shift increases the amount of time users spend on Meta’s platforms, which means they’re viewing more ads and therefore becoming more valuable to the company. Speaking of which, Meta is also continuing to develop AI tools for advertisers that can help them create the most engaging content and target the most relevant audiences.
Ultimately, Zuckerberg says, businesses will be able to tell Meta their goals and budget, and the AI engine will handle the entire process autonomously for them — from creating the creative to selecting the audience. That’s a game changer, because it means even the smallest business without a marketing team can get the most possible return on its ad dollars.
But it gets better. Meta released a chatbot last year called Meta AI that can answer questions on most topics and even generate images on demand. It paves the way for Business AI, which could be a substantial revenue stream in the future. Zuckerberg believes that every business will have its own AI agent trained to handle incoming customer queries on the likes of Messenger and WhatsApp, and even process sales. That will enable round-the-clock service even when the business owner is unavailable.
Llama is the key to everything
Llama is the LLM that powers the exciting AI features I just mentioned. It’s open-source because Zuckerberg believes that a widely deployed model used by thousands of developers will improve much faster than if Meta were to do all the testing and troubleshooting alone.
Meta just released Llama 3.1, and with 405 billion parameters, it’s the most advanced version yet. Zuckerberg says Llama 3 can already compete with most leading models, but he’s focused on developing Llama 4, which he believes will set the industry standard next year.
Training Llama 4 requires up to 10 times the data center compute capacity of Llama 3, meaning it will likely cost tens of billions of dollars in new infrastructure. I’ll talk more about the costs in a moment, but better LLMs will result in more advanced AI applications for users, so Meta will need to invest heavily if it wants to stay ahead of the curve.
Otherwise, users might spend more time on OpenAI’s ChatGPT or Alphabet’s Gemini instead of Meta AI, potentially jeopardizing the company’s revenue.
Meta’s profits continue to rise
Meta generated $39 billion in revenue in Q2, up 22% from the same period last year. But the company’s bottom line is the real story, as it continues to benefit from cost-cutting measures it has implemented since late 2022. They include 21,000 layoffs and a pledge from Zuckerberg to spend more cautiously on projects like the metaverse, which generate minimal revenue.
As a result, Meta’s net profit in Q2 increased 73% year over year to $13.4 billion. That followed three consecutive quarters of triple-digit percentage growth.
The result was especially impressive considering how quickly Meta is ramping up its AI capital spending. It allocated $8.4 billion to capex in Q2, up from the $6.3 billion it spent in the first quarter.
Meta CFO Susan Li told investors that capex could reach $40 billion for all of 2024, so spending looks set to accelerate in the second half of the year. Additionally, Li predicts “significant” growth in capex in 2025.
Nearly all of that money will go toward data center infrastructure, servers and chips to accelerate the development of LLMs like Llama 4, which will bring new, user-facing AI applications to life.
Meta’s Path to the $2 Trillion Club in Three Years
Based on Meta’s earnings per share of $19.59 over the past 12 months and its current share price of around $488, it’s trading at a price-to-earnings (P/E) ratio of 24.9. That means it would need to rise 23% to trade in line with the Nasdaq-100 index, which trades at a price-to-earnings ratio of 30.6. That alone would bring Meta’s market cap to nearly $1.5 trillion.
But Meta is even cheaper when you measure it against future earnings. Wall Street expects the company to generate $23.93 in earnings per share in 2025, giving the stock a forward price-earnings ratio of just 20.4. If that forecast holds and Meta’s price-earnings ratio also rises to trade in line with the Nasdaq-100 by the end of next year, that would put the stock at a valuation of $1.8 trillion.
That implies that Meta only needs to grow its earnings per share by 11% through 2026 to justify a $2 trillion valuation. Considering that the company grew its earnings at a compound annual rate of nearly 30% in the decade between 2014 and 2023, I think there’s a good chance it will do just that.
What’s more, there’s a good chance that AI could be a bigger tailwind for Meta than analysts are currently expecting. The company’s growing portfolio of AI tools, particularly for businesses, could boost marketing spending and also steal advertising revenue from competitors. There’s no telling how big that chance will be.
Even if it doesn’t get there in three years, I think Meta has a clear path to eventually joining the $2 trillion club.
Should You Invest $1,000 in Meta Platforms Now?
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Randi Zuckerberg, former chief marketer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: long Jan 2026 $395 calls on Microsoft and short Jan 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Prediction: 1 Unstoppable Stock Will Join Nvidia, Apple, Microsoft, and Alphabet In The $2 Trillion Club Within 3 Years was originally published by The Motley Fool
