Meta stock quietly gained 348% in 2 years while markets focused on Nvidia, Apple

Shares of Meta Platforms, the parent company of Facebook, have surged 348% over the past two years, cementing its position as a standout performer among major tech companies.

This meteoric rise lags only behind Nvidia, whose stock soared 1,052% in the same period.

Meta’s rebound marks a significant turnaround from the uncertainty it faced in late 2022 when concerns about competition, privacy restrictions, and operational identity weighed heavily on its outlook.

From bottoming out to soaring: Meta's stock turnaround

Meta shares hit a low of $88.09 on November 4, 2022, amid the company’s struggles with a declining user base, competition from TikTok, and Apple’s privacy policies that impacted ad targeting.

However, by focusing on cost-cutting and strategic investments, Meta saw a sharp recovery, with its stock climbing over 560% to reach $582.01 recently.

Meta’s renewed financial discipline and pivot toward artificial intelligence (AI) were instrumental in this reversal.

Strategic cost cuts and AI investments fuel Meta’s resurgence

CEO Mark Zuckerberg declared 2023 the company’s “Year of Efficiency.” In response to mounting losses, Meta drastically reduced expenses, which had increased 34% in 2021 and 23% in 2022.

Capital expenditures dropped by 13% in 2023, following a steep rise in prior years. Meta also implemented layoffs and froze hiring, cutting thousands of positions and job openings.

At the same time, Meta increased ad displays across its platforms—Facebook, Instagram, and WhatsApp—boosting ad impressions by 28% as user engagement grew by 8%.

A key part of this strategy was Reels, Meta’s answer to TikTok, which helped drive increased engagement across Instagram.

Meta's AI bet: Open-source innovation with Llama models

Unlike many competitors, Meta embraced an open-source approach for its AI models.

The Llama language models have allowed the company to crowd-source improvements rapidly, placing Meta among leaders in generative AI.

As of August 29, Meta reported 185 million weekly active users on Meta AI, nearing the 200 million users reported by OpenAI for ChatGPT.

Meta’s AI offerings, including free chatbot services and live image creation tools, have received widespread acclaim.

Rather than charging users for these services, Meta aims to boost engagement and integrate AI tools across its platforms, following a strategy similar to its ad-driven social media model.

AI investments drive future growth

Meta has also ramped up investments in advanced AI infrastructure, focusing on Nvidia graphics processing units.

In April, Zuckerberg emphasized the company’s commitment to scaling AI operations, declaring,

While competitors like OpenAI have opted for subscription-based monetization, Meta is banking on ad revenue, a strategy that aligns with the 98% of its 2023 income derived from advertisements.

Zuckerberg has said the company plans to monetize AI tools gradually by leveraging improved engagement across its platforms.

Earnings expectations reflect growth momentum

Wall Street analysts are optimistic about Meta’s financial trajectory, with expectations of 19% earnings growth to $5.21 per share and an 18% revenue increase to $40.2 billion for the upcoming earnings report.

Analysts anticipate that Meta’s AI strategy, alongside improved ad targeting, will continue to boost profitability.

Zuckerberg’s team is likely to highlight the company’s transformation during the earnings call, marking a stark contrast to the challenges Meta faced two years ago.

Meta’s resilience and strategic pivot toward AI could position it as an early financial beneficiary in the emerging generative AI space.