Shares of social media giant Meta Platforms (META +2.48%) are trading at about $675 as of this writing, giving the stock a valuation of about 29 times earnings. That’s not cheap — especially for a company planning a massive artificial intelligence (AI) investment cycle. But once you consider how rapidly the company is growing, the valuation starts to make more sense.

Meta’s fourth-quarter revenues surged 24% year over year to $59.9 billion. This was an acceleration from 22% year-over-year growth for the full year. And the company’s already impressive engagement continued to grow sharply, with daily active users 3.58 billion in December — up 7% year over year.

With a backdrop like this, I think Meta stock will be higher in five years. But how much higher?

Strong growth, and even stronger first-quarter guidance

Meta’s fourth-quarter growth was impressive, but management’s outlook for Q1 was even more notable.

Management guided for first-quarter revenue of $53.5 billion to $56.5 billion. The midpoint of this range implies about 30% year-over-year growth — a remarkable outlook for a company with a market capitalization of more than $1.7 trillion.

To be fair, there is some currency benefit in the forecast. Meta chief financial officer Susan Li said the guidance assumes foreign exchange will be about a four-percentage-point tailwind to year-over-year revenue growth. But even after adjusting for this, the outlook still points to 26% growth — an acceleration from Q4.

“We are now seeing a major AI acceleration,” Meta CEO Mark Zuckerberg said during the company’s fourth-quarter earnings call.

Additionally, Zuckerberg has bold ambitions for the future.

“Our vision is building personal superintelligence,” the CEO explained. “We’re starting to see the promise of AI that understands our personal context — including our history, our interests, our content, and our relationships.”

A massive investment cycle

The risk, however, is the enormous capital required to achieve Zuckerberg’s ambitious vision for Meta.

Meta spent $72.2 billion on capital expenditures, including principal payments on finance leases, in 2025. And, for 2026, management expects that figure to jump to $115 billion to $135 billion. This increase, management explained in the company’s fourth-quarter update, is being driven by investments to support the company’s various growth initiatives, including aggressive investments in AI.

With spending like this, Meta’s free cash flow and earnings will likely both come under significant pressure.

Still, management is trying to show that it can invest aggressively without letting expenses run unchecked. Reports last week said Meta plans to lay off about 10% of its workforce, or about 8,000 employees, and close roughly 6,000 open roles. This suggests management is still looking for ways to stay financially disciplined even as it ramps up infrastructure spending.

There are early signs that this discipline could work.

Meta said in its fourth-quarter update earlier this year that it expects 2026 operating income to be “above 2025 operating income” despite the major step-up in infrastructure investment. That may have been one of the most important lines in the company’s outlook.

Meta Platforms

Today’s Change

(2.48%) $16.34

Current Price

$675.49

Where Meta stock could be in five years

For a five-year estimate, I think the better starting point is not Meta’s reported 2025 earnings per share of $23.49, because full-year earnings were weighed down by an unusually high tax rate tied to a valuation allowance charge. A rough normalized earnings base closer to $29 per share seems more useful for thinking about the company’s underlying earnings power.

In addition, given the company’s strong top-line momentum and the AI growth opportunities management has identified to invest in aggressively, I think it’s reasonable to assume Meta can drive this adjusted earnings per share figure higher, at an average annualized rate of about 15% to 18%, over the next five years, putting earnings per share at about $58 to $66 in five years. Assigning a reasonable price-to-earnings ratio of 20 to those higher earnings would imply a stock price range of about $1,160 to $1,320.

My five-year price estimate for Meta stock, therefore, is about $1,250.

From a stock price around $675 today, that would imply annualized returns of roughly 13%, excluding dividends.

But investors shouldn’t ignore the risks. Meta is committing an extraordinary amount of capital to AI infrastructure at a time when the long-term returns on this spending are still uncertain. Regulatory scrutiny remains a real issue. And the advertising business, while strong, is still economically sensitive.

Overall, though, I believe the stock is attractive at today’s price. Meta’s revenue growth is strong, management’s Q1 outlook is even stronger, and the business seems to be maintaining a surprising level of earnings power during a heavy investment cycle. But because of the company’s massive capital expenditure plans, investors interested in the stock should still view it as somewhat high risk and size any position accordingly.