Can Meta Platforms Reach a $9 Trillion Valuation in 5 Years? Here's What It Would Take
Meta Platforms is incentivizing its executives with stock options to boost the company's value to $9 trillion in five years. The company is focusing on generative AI to enhance its advertising business, which saw a 22% revenue increase last year. Key strategies include developing an AI agent for advertising, custom chatbots for businesses, and monetizing its AI chatbot. However, increased capital expenditures for AI research may pressure the bottom line. Meta's current market cap is $1.4 trillion, and significant growth will require new products and monetization strategies.
Meta Platforms (META +2.98%) is offering some of its top executives some big incentives to push the value of the company to new heights. Filings with the Securities and Exchange Commission show that the company granted new stock options to six executives, all with an expiration date within five years. The highest strike price for those options is $3,727.12 per share, which would give Meta a value of about $9.4 trillion based on its current shares outstanding.
The compensation packages are designed to align management with shareholders, and notably don't include founder and CEO Mark Zuckerberg, who already owns roughly 13% of the shares outstanding. If Meta's going to reach $9 trillion, it will have to execute on the numerous opportunities presented by generative artificial intelligence (AI) in its business. And it'll probably need some help from market participants as well.
Let's see how that might happen.
Image source: Getty Images.
How artificial intelligence is impacting Meta right now
Meta has spent heavily on artificial intelligence throughout its history, as it's become core to both Facebook and Instagram. Machine learning algorithms determine the exact right content to show the exact right user at the exact right time to get them to engage and keep scrolling through the app's feeds.
The company's recent advances in AI have enabled it to expand its algorithms by using more inputs and applying them to more general engagement across its apps. The results have been particularly noticeable in its recent quarterly reports. Meta's ad revenue climbed 22% last year, driven by increases in both ad impressions and price per ad. That indicates it's not just showing more ads, but more relevant ads. Management says there's still a lot of room to improve those algorithms and continue driving positive results for the ad business.
While Meta's AI improvements have already shown up in its top-line results, its bottom line could face some pressure going forward. That's because it's seen a massive increase in capital expenditures to support its AI research -- both its machine learning algorithms and its large language model development. Those expenses are amortized over the useful life of the investments, so they don't all hit the income statement at once. Meta increased capex 84% last year, and management plans to step up spending another 73% in 2026 based on the mid-point of its guidance.
But that spending could eventually be the ticket to Meta's $9 trillion valuation. Here's what it would take.
NASDAQ: META
Key Data Points
Strategies Meta could use to reach $9 trillion
For Meta to expand its market cap more than six-fold in just five years, it's going to need more than just continued incremental improvements in its core advertising business. It needs to meaningfully expand the business with new products and monetization strategies. Generative AI combined with its existing properties could be instrumental in doing just that.
There are three main products currently in development at Meta that could generate hundreds of billions in revenue over the next five years.
1. New agentic advertising
Meta has developed several tools to make advertising easier. Its Meta AI business assistant helps optimize campaigns and provides automated account support. Its video generation tools can help create more engaging video ads. But a complete AI agent that can develop and manage digital ad campaigns across Meta's properties could unlock a ton of value for both Meta and the small businesses it serves. Meta is reportedly working on such an agent and it could be released by the end of 2026.
An AI agent for advertising could attract new advertisers who don't have the personnel or expertise to advertise on Facebook and Instagram. It could also improve the quality of ads across the platform. Overall, that means higher average ad prices for Meta.
2. Business AIs
The next opportunity currently in the works is Meta's Business AIs, custom chatbots deployed via WhatsApp and Messenger. Management says it's already seeing positive results with Business AIs in Mexico and the Philippines, where it's testing the product. It plans to expand the chatbots to more markets this year.
Businesses may be willing to pay a significant sum for AI that can handle sales and customer service messages without hiring any staff. William Blair analyst Ralph Schackart said AI chatbots could produce $100 billion in incremental revenue for Meta by 2030.
3. Meta's AI chatbot
The last major opportunity for Meta is to grow engagement with its Meta AI chatbot to the point where it can start monetizing engagement and new features. It passed more than 1 billion monthly active users last year, but management has been light on details about how engaged those users are. For reference, OpenAI reported 900 million weekly users in February with 50 million paid subscribers.
OpenAI started a small pilot program to test advertising within ChatGPT a couple of months ago. It's quickly ramped up to $100 million in annual recurring revenue. That shows the viability and potential for advertising within AI chatbots. And given that Meta has much more user data and more small-business advertisers already working on its platforms, it could quickly grab a large share of the market.
What it will take for Meta to top $9 trillion
To reach a $9 trillion valuation, these features and more will have to drive significant financial improvements at Meta. After a sell-off this year, shares currently trade at just 17.4 times forward earnings expectations. It arguably deserves a much higher valuation. And if it can accelerate its earnings growth with AI advancements, it could reach a multiple of 30 or higher.
But the earnings multiple the market assigns Meta is largely out of its control. Even at 30 times earnings expectations, analysts will need to expect $123.24 in earnings per share in 2031 for the stock to reach the highest strike price among the executive options grants. That would represent 32% compound annual earnings growth over the next five years, up from $23.49 per share in 2025. That may be possible, but it's certainly a stretch goal.
The important consideration for investors today is that the board has structured executive pay packages to align incentives with shareholders. Excellent execution and a little bit of luck could lead to tremendous upside for the stock, and shares are currently priced very low relative to immediate earnings expectations. Even if Meta isn't on a path to hit $9 trillion, it could move meaningfully higher from here over the long run.
