Here's What a $1,500 Investment in Meta Platforms Stock Could Be Worth in 5 Years
Key Points
Meta stock has staged a nice rally in September, and that could just be the start of a bigger move.
The company's Muse AI agents could unlock a whole new revenue stream.
While its stock has been largely flat over the past year, Meta Platforms (NASDAQ: META) has seen a strong September rally, and this could be just the start. In fact, it feels like the artificial intelligence (AI) stock is just warming up. With $1,500, investors can buy about two shares.
Meta Platforms has already proven highly capable of using AI to drive growth in its core business. It has been doing that in two main ways. First, it's using AI to consistently improve its recommendation algorithm. This is feeding users more relevant content based on their interests and keeping them on Meta's social media apps longer, allowing it to serve those users more ads.
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Second, it supplies its advertisers with AI-powered tools they can use to create better, more effective ads, while also improving ad relevancy and increasing conversions. This is allowing it to charge higher ad prices. This dynamic could be seen at work in Q2, as Meta's ad load jumped 14%, while ad prices climbed 12%.
The company also has promising opportunities with WhatsApp and Threads, which are still in the early stages of serving ads to their users. WhatsApp has more than 3 billion users, and while the vast majority of them are outside the U.S., where monetization is lower, this is still a big opportunity. Threads, meanwhile, has over 500 million monthly users and is still in the early innings of monetization.
Image source: The Motley Fool.
A huge agentic AI opportunity
What has investors excited about Meta stock in September, however, is the company's launch of its personal agentic AI product, Muse. These personal AI agents can handle a variety of tasks -- writing emails, comparing insurance policies, planning and booking travel, making reservations and appointments, managing money, and helping users shop, just to name a few. The app has been a huge early success, hitting around 700,000 daily users just 11 days after its launch, according to SimilarWeb, and seeing 1.8 million downloads in the U.S. and Canada within its first 12 days, according to Apptopia.
Meta plans to monetize its Muse AI agents in two main ways. The first is with subscriptions. While it expects the vast majority of users to stay on its free plan, it will have monthly paid tiers for "power users." It will also collect small fees from any transactions that Muse facilitates.
Meta also recently revealed that it plans to go after the enterprise AI market. It hired MongoDB CEO Chirantan "CJ" Desai to lead the charge, opening up a third big opportunity for the company.
Where could Meta trade in five years?
Analysts are projecting strong revenue and earnings growth from Meta over the next five years. The revenue consensus goes from an estimated $254 billion this year to over $550 billion in 2031, while earnings per share (EPS) are expected to jump from nearly $31 to over $66.50 over the same period.
Meanwhile, if Meta's Muse AI agent becomes a major driver of revenue growth, those estimates could be meaningfully low. Cantor Fitzgerald analyst Deepak Mathivanan recently estimated that the personal AI agent market could become worth $250 billion, including only subscriptions and retail commissions, and that doesn't include the enterprise market, which Meta also looks ready to attack.
Given its strong late-year growth projections and opportunities, I think Meta could command a forward P/E multiple of 25 in 2031. While there is no analyst consensus yet for 2032, another 20% earnings growth would bring its 2032 EPS to around $80. That would make Meta around a $2,000 stock in five years, and turn a $1,500 investment made now into a position worth around $4,000.
If Meta fails to scale and monetize its new AI agents and can't justify its heavy AI spending, I could see the market rating it with a much lower multiple. However, I think there is a greater probability that these forecasts will prove to be too conservative. As such, I think Meta looks like a great growth stock to buy even after its September run.
Geoffrey Seiler has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms and MongoDB. The Motley Fool has a disclosure policy.