We recently published a list of 10 Best Blue Chip Stocks to Buy for 2025. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against other best blue chip stocks to buy for 2025.
Both conservative and risk-tolerant investors favor blue chip stocks due to their solid business models, impressive track records, and attractive risk-reward profiles. These stocks are backed by companies with strong brand names and reputations that generate dependable earnings and consistent dividends, which provide stability and passive income during turbulent market conditions.
In recent years, Wall Street has become reliant on the best blue chip stocks. While the S&P 500 was up by about 24% in 2024, most of the gains were driven by gains in seven of the biggest blue chip stocks. The “Magnificent 7” stocks, which include seven of the biggest companies by market cap, accounted for a 13.7% point gain in the S&P 500. Therefore, investors who focused on these stocks ended up generating significant gains.
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The trend is not expected to change in 2025. Blue chip companies should be the biggest beneficiary as the Federal Reserve cuts interest rates and the new administration under Donald Trump pushes for fewer regulations. The easing of regulatory pressure that has taken a significant toll on tech giants should be a boon to see blue chip stocks edge even higher. David Miller, co-founder at Catalyst Funds, expects blue chip stocks to continue leading the way in 2025.
“The Mag 7 stocks are generating significant growth in terms of revenue and earnings power,” he said earlier this month. “These companies are massive monopoly businesses with strong fundamental tail winds. I have no reason to believe that the Mag 7 names won’t continue to dominate the S&P in 2025.”
Valuations among the blue-chip stocks have gotten out of hand after two years of blockbuster gains amid the artificial intelligence frenzy. Blue chip companies boast significant profits and a competitive edge to back their valuations up, however.
“The Magnificent Seven are not pie-in-the-sky companies: They’re generating “tremendous” revenue for investors”, said Fitzgerald, principal and founding member of Moisand Fitzgerald Tamayo. “How much more gain can be made is the question,” he added.
Therefore, any well-diversified investment portfolio should include some of the best blue chip stocks. It’s the only way investors can take advantage of the market rally that’s driven by various factors, including the artificial intelligence frenzy, robust economic growth and friendly monetary policy.
Our Methodology
To make our list of the 10 best blue chip stocks to buy for 2025, we analyzed the market, focusing on large market cap companies (more than $100 billion) with well-established, financially sound businesses. We then examined their performance over the past year, focusing on the underlying fundamentals that make them stand out. Finally, we ranked these companies in ascending order based on their 12-month return in 2024.
At Insider Monkey, we are obsessed with 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).
Meta Platforms, Inc. (NASDAQ:META)
Market Cap as of January 8: $1.54 Trillion
Past Year Gain (2024): 71%
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) is a communication services juggernaut that owns and operates four of the most used social networking apps. The company’s edge as one of the best blue chip stocks to buy for 2025 stems from its flagship apps commanding billions of daily active users. Facebook, Instagram, WhatsApp and Messenger are the apps that are strengthening the social networking juggernaut’s prospects in the burgeoning digital advertising sector.
The company’s advertising revenues are rising as the macro environment stabilizes on lower interest rates. Additionally, Meta Platforms, Inc. (NASDAQ:META) is attracting more spending from Chinese gaming and e-commerce companies looking to target its massive user base across various platforms. In addition, artificial intelligence greatly benefits the company’s advertising tools.
The fact that over 1 million advertisers are already using Meta Platforms Inc (NASDAQ:META) generative-powered tools affirms the company’s growth prospects in the lucrative digital advertising landscape. While the Reality Labs division is yet to turn profitable, things should change with the integration of AI features. The company is launching AI-powered Ray Ban smart glasses, which are expected to provide another solid revenue stream beyond digital advertising.
Here is what Hardman Johnston Global Equity said about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2024 investor letter:
“During the quarter, we initiated one new position in Meta Platforms, Inc. (NASDAQ:META) and had no liquidations. Management at Meta has effectively addressed concerns about investment efficiency by shifting resources from Reality Labs towards broader AI initiatives with a clearer path to profitability. We believe management has successfully articulated the benefits of this strategy, highlighting how AI is driving user engagement and advertiser productivity. This, in turn, fuels continued revenue momentum and increases the likelihood of positive earnings surprises in the future. Additionally, the parent company of the social media platform, Facebook, has recently taken positive steps to enhance safety, which suggests to us a shift towards a more proactive and responsive approach to addressing important potential challenges and concerns. Weak oversight over data privacy protection was a key reason why we sold the position in the portfolio back in 2021. Removing this governance overhang allows us to feel comfortable to enter back into the stock at a time when we believe it is poised for strong earnings growth going forward.”
Overall, META ranks 3rd on our list of best blue chip stocks to buy for 2025. While we acknowledge the potential of META as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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.
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Disclosure: None. This article is originally published at Insider Monkey.
