We recently compiled a list of the 10 Best Performing S&P 500 Stocks So Far in 2025. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against the other stocks.
Emily Rowland, co-chief investment strategist at John Hancock Investment Management, joined a discussion on CNBC’s ‘Squawk Box’ on February 13 to share her insights on the markets and the upcoming PPI (Producer Price Index) report. She thinks that the S&P earnings are highly underappreciated right now. She noted that the market’s reaction to inflation data has been asymmetric. While higher inflation numbers are often shrugged off, any relief from softer inflation prints tends to cause bigger moves in the markets. This was evident in the response to the CPI (Consumer Price Index) report. Regarding market performance, Rowland highlighted that the S&P 500 earnings were coming in with strong growth (16% year-over-year for the fourth quarter) and this growth is broad-based across sectors like healthcare and utilities. Financials also showed significant gains with a 50% increase.
On discussing President Trump’s announcement of retaliatory tariffs via Truth Social, Rowland said that her team avoids making tactical investment decisions based on political outcomes due to their unpredictability and rapid changes. In terms of attractive sectors for investment within US markets, she highlighted healthcare and industrial companies as promising areas due to their strong fundamentals and potential benefits from ongoing supply chain reshoring activities within the US. While acknowledging political factors can influence sector performance, her strategy focuses on longer-term economic trends rather than short-term political developments when considering investments in key indices like those represented by major US equities such as those found in the S&P 500 index.
Methodology
We first sifted through the Finviz stock screener to compile a list of the best-performing S&P 500 stocks. We then picked the top 10 stocks with the highest year-to-date performance, as of February 17. The stocks are ranked in ascending order of their year-to-date performance. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of developers working in unison to create the company’s messaging application.
Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Year-to-Date Performance as of February 17: 25.82%
Meta Platforms, Inc. (NASDAQ:META) develops products that connect people through mobile devices, PCs, VR/MR headsets, AR, and wearables. It operates through its Family of Apps (FoA) and Reality Labs (RL) segments. Its FoA includes Facebook, Instagram, Messenger, Threads, and WhatsApp, while RL focuses on VR, AR, and MR hardware, software, and content.
The company’s advertising revenue within its FoA segment grew 21% year-over-year to $46.8 billion in Q4 2024. This growth drives its stock price surges. It’s using AI in two ways to boost ad revenue. One is through Meta AI, which is a personalized assistant with over 700 million monthly active users. The other is Andromeda, an AI-powered machine learning system that improves ad targeting and performance.
These enhancements are driving its bottom line, with Q4 EPS growing by 60% year-over-year. The company’s commitment to AI is evident in its substantial capital expenditures, which reached $37 billion in 2024. AI infrastructure developments from these investments include massive data centers and advanced AI models like Llama.
The focus on AI is not limited to software. Meta Platforms, Inc. (NASDAQ:META) is also exploring hardware innovations, such as the Ray-Ban Meta AI glasses, which have reportedly sold over 1 million units. It’s also reportedly developing AI-powered humanoid robots, creating an RL team to build the underlying AI, sensors, and software for other manufacturers. Tigress Financial reiterated a Buy rating on the company with a $935 price target on February 11 for these reasons.
Rowan Street Capital highlighted the company’s strong performance, its successful long-term investment (22% IRR), and its optimistic outlook based on various growth initiatives. It stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on an investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6 years holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
Overall, META ranks 8th on our list of the best performing S&P 500 stocks so far in 2025. While we acknowledge the potential of META as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.