The S&P 500 has risen about 10% this year and is hovering near its all-time highs. That rally was largely driven by the tech sector’s robust growth rates, big buybacks, earnings beats across the market, easing trade tensions, and hopes for deeper interest rate cuts. But with a price-to-earnings ratio of 30, the S&P 500 also looks historically expensive. However, some of the S&P 500’s top stocks are outperforming the benchmark index by a wide margin but still trading at reasonable valuations.

One of those stocks is Meta Platforms (META -1.69%), the parent company of Facebook, Instagram, Messenger, and WhatsApp. Meta’s stock has rallied nearly 30% year to date but trades at just 27 times its trailing earnings. Let’s see why it crushed the market — and why it might soar even higher through the end of 2025.

Image source: Getty Images.

The world’s biggest social media company keeps growing

Meta is the world’s largest social media company. It served 3.48 billion daily active people (DAP) across its entire family of apps in the second quarter of 2025. That’s nearly two-thirds of the world’s adult population. But over the past year, Meta still gained new users, increased its total ad impressions, and raised its ad prices.

Data source: Meta Platforms. YOY = Year-over-year.

That growth was driven by its new artificial intelligence (AI)-powered algorithms and ad targeting systems, which attracted more users and monetized them more effectively. Those upgrades countered Apple‘s privacy changes on iOS, which throttled its ad sales three years ago. Meta’s short-video platform, Reels, kept pace with ByteDance’s TikTok and locked more users into Facebook and Instagram. It’s also been rolling out more ads on Threads, which is gradually gaining momentum against X in the microblogging market.

Since Meta reaches so many users and holds a near duopoly in the digital advertising market with Alphabet‘s Google, it yields tremendous pricing power. That advertising ecosystem also serves as a firm foundation for building new products and services.

Its margins are expanding, and its profits are soaring

Meta continues to subsidize the expansion of its unprofitable Reality Labs segment (which creates its virtual and augmented reality products) with its higher-margin ad sales as it ramps up its investments in its own AI infrastructure. Yet its operating margins still expanded at a healthy clip over the past year as its earnings per share (EPS) grew by the high double digits.

Data source: Meta Platforms. YOY = Year-over-year.

That robust earnings growth can be attributed to Meta’s surging sales of AI-driven ads, its higher ad prices, its prior workforce reductions (especially in 2023 as it weathered Apple’s iOS changes), the classification of its cloud and data-center costs as capital expenditures (instead of immediate operating expenses), and its ongoing buybacks.

Simply put, Meta can afford to keep pouring its cash into unprofitable or loss-leading projects to expand its ecosystem. While many of those projects might flop, some of them might stick and strengthen Meta’s defenses against Google and its other AI-driven competitors.

Why will Meta’s stock rally through the end of the year?

For 2025, analysts expect Meta’s revenue and EPS to grow 19% and 18%, respectively. From 2024 to 2027, they expect Meta’s revenue and EPS to rise at a compound annual growth rate (CAGR) of 16% and 13%, respectively. It doesn’t look expensive relative to those growth rates, and it could command a higher valuation if the trade tensions wane and the Fed cuts its benchmark rates again. Assuming Meta matches analysts’ expectations and trades at a slightly more generous 30 times forward earnings by the end of 2025, its stock price would rise about 20% to nearly $900. That’s why I expect Meta to keep outperforming the S&P 500 through the end of the year.