Meta Has Become The Mag Seven’s Cheapest Bet Despite AI Push — But Can Zuckerberg Flip The Market’s Mood?

• The stock set a fresh peak (intraday) of $796.25 on Aug. 15, and is down about 20% since.  
• Meta's forward P/E is currently 21.74, a discount to S&P's P/E, but consensus analysts' stock price target models imply roughly 31% upside.
• Evercore ISI maintained its bullish view on Meta, citing a sum-of-the-parts valuation.

Social-media giant Meta Platforms, Inc.'s (META) stock has had a roller-coaster 2025, with its three-year rally stalling early this year, as President Donald Trump shocked the market with his infamous sweeping tariff announcement and a Chinese artificial intelligence (AI) startup's threat ravaged tech stocks.

Notwithstanding these threats, Meta's stock is in the green for the year, up 9.71%, but the gains pale in comparison to those of the Magnificent Seven group. The Roundhill Magnificent Seven ETF (MAGS), considered a proxy for the performance of seven megacap names, has advanced nearly 23% this year.

Meta Attractively Valued

The relative stock underperformance has rendered the social media giant's valuation attractive vis-à-vis its Mag 7 peers and the S&P 500. According to Yardeni Research, the S&P 500 forward price-earnings (P/E) multiple is 22.4, and that of the Mag 7 group is 28.9.

Source: Yardeni Research

Meta's forward P/E is currently at 21.74. Incidentally, all the other Mag 7 stocks trade at a premium to the S&P 500 Index and Meta.

Source: Fiscal.ai

Investors Unfriending Meta

The second leg of weakness came in late October, when Meta shocked the investing community by reporting an unexpected third-quarter loss. Trump was again blamed for Meta's predicament, as his "Big Beautiful Bill Act" required the company to record a hefty $16 billion tax provision. But the saving grace is the company's reassurance that its tax bill will be significantly lower for the rest of the year and also in the future.

Meta investors were also spooked by management's commentary on higher capital expenditures. Co-founder and CEO Mark Zuckerberg, however, painted a rosy picture of the company's Superintelligence Labs, a division set up earlier this year that brings all its AI efforts under one roof, with the mandate to achieve artificial general intelligence (AGI).

Rubbing salt to the wound, fund managers and skeptics began calling for an AI bubble burst and for accounting irregularities by hyperscalers to window-dress their profits.

Will Meta Get Back In Favor?

Barring any macroeconomic setback or a marketwide correction, the odds of the stock returning to its heyday are high. It set a fresh peak (intraday) of $796.25 on Aug. 15, and is down about 20% since then. According to Koyfin, analysts' average price target for META is $841.27 — which implies that the stock is trading at a 31% discount from that mark.

As recently as Tuesday, Evercore ISI maintained an 'Outperform' rating on Meta stock and its $875 price target, according to Investing.com. The optimism is based on a sum-of-the-parts valuation, as the firm views the Instagram business as a $40 billion business by 2030, generating $20 billion in operating income and $7.15 in earnings per share.

According to the firm, Meta is pursuing AI leadership from a "Clear Position of Strength," buoyed by a robust online advertising market, strong user and engagement growth, increasing monetization effectiveness, and additional growth opportunities in core Meta products like Threads, Meta AI, and Facebook Marketplace.

But retail investors have turned wary. On Stocktwits, retail sentiment toward the stock has been 'bearish' for a week. One user even viewed Meta's AI implementation as "horrible." Most bearish watchers are bracing for a move toward $400.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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