Mark Zuckerberg is on a roll, and he’s not slowing down. Back in April, Meta Platforms (META) delivered a blockbuster Q1, with a $42.32 billion revenue haul, up 16%, driven by AI-powered ad growth. The momentum seems to be going strong throughout Q2, with Meta recently announcing a $14.3 billion investment for a 49% stake in Scale AI, which will further solidify its leadership in the space. Meta also wants to have Scale CEO Alexandr Wang, spearhead a superintelligence lab. Let’s unpack why this deal could be transformative for Meta.
Meta is experiencing strong momentum in the AI space. In Q1, the company reported a 5% increase in ad impressions and a 10% rise in ad pricing, driven by enhanced targeting capabilities across Reels and Stories on Instagram and Facebook, which now serve a combined 3.43 billion daily active users. Meta AI, positioned as a competitor to ChatGPT, is approaching one billion monthly users and is already powering personalized content feeds and early-stage trials of AI-integrated smart glasses, highlighting Meta’s unparalleled global reach.
The potential addition of Scale AI, a leading data-labeling company valued at $29 billion, could further accelerate Meta’s AI innovation. Scale AI generated $870 million in revenue last year and is on track to reach $2 billion this year, underscoring its significant role in refining machine learning models. When added to META’s revenues, Scale appears value accretive.
Scale’s capabilities could directly support Meta’s AI infrastructure and enhance applications like WhatsApp Business, which now serves over 100 million businesses and is expected to become a key driver of revenue growth as AI-driven customer engagement tools gain traction. For instance, AI-powered chatbots that anticipate customer needs could help small businesses drive sales. Additionally, Scale’s data assets might elevate Meta’s Ray-Ban Stories smart glasses, enabling advanced features such as real-time translation or navigation that could rival offerings from competitors like Google’s Gemini.
The decision to acquire a 49% non-voting stake in Scale AI appears to be a strategic move, particularly in an environment where regulatory scrutiny of Big Tech remains intense. Meta’s prior acquisitions—such as Instagram and WhatsApp—continue to attract attention from antitrust authorities, and a full acquisition of Scale could have raised similar concerns. By allowing Scale to operate independently, Meta avoids potential antitrust issues while still gaining access to the company’s talent, led by CEO Alexandr Wang, and its valuable data infrastructure.
Scale AI CEO Alexandr Wang (right) at the Breakthrough Prize Awards in Santa Monica, CA (April 2025)
This approach mirrors recent investment strategies by Microsoft with OpenAI and Amazon with Anthropic, where influence is exercised without complete ownership. The structure not only preserves Scale’s ability to serve a broad client base, including Meta’s competitors like Alphabet (GOOGL), but also reduces regulatory pressure while enabling indirect advantages for Meta’s AI development efforts.
Meta is also bringing on Scale AI’s CEO, 28-year-old Alexandr Wang, to lead a newly formed 50-person “superintelligence lab”—its most ambitious AI initiative to date. Wang will be tasked with advancing efforts toward artificial general intelligence (AGI), the pursuit of AI systems that can exceed human performance across a wide range of tasks. Backed by Meta’s projected $65 billion in 2025 capital expenditures and a reported 1.3 million GPUs, the lab—staffed with top talent from Google and DeepMind—has the potential to position Meta AI as a global leader in next-generation AI development.
Scale’s robust data pipeline is also expected to accelerate the advancement of Meta’s Llama 4 models, addressing concerns raised by developers and strengthening its competitiveness against offerings from OpenAI. The integration of advanced AI could unlock entirely new revenue streams, such as AI-powered e-commerce features that enable Instagram to recommend personalized outfit combinations in real time.
However, there are challenges to navigate. Ongoing concerns around compensation for gig workers, labeling AI data, and the potential for client conflicts—given Scale’s broad customer base—could present reputational or operational risks. Still, with Meta’s AI infrastructure already fueling measurable growth, the addition of Wang and the focus on AGI could reinforce its leadership position, making Meta one of the most influential companies in the evolving AI landscape.
What stands out most in all of this is that Meta’s valuation remains relatively modest, trading at just 27x earnings per share (EPS), despite benefiting from significant earnings growth tailwinds. Notably, Wall Street appears to be assigning little—if any—value to the company’s AI initiatives, which is consistent with a long-standing pattern of conservative pricing around Meta’s stock. While the market has often underestimated Meta’s potential, the core story lies in its sustained and accelerating growth. For long-term investors, value creation seems likely to continue, even in the absence of multiple expansion.
Perhaps more surprising than the valuation itself is the disconnect between analyst forecasts and the company’s actual performance. Current consensus expects only 7% EPS growth for the year, despite Meta delivering 37% growth in Q1 alone and 60% growth in the prior full year.
Even mid-range forecasts projecting growth in the mid-teens appear conservative, given Meta’s historical trajectory and the accelerating impact of its AI initiatives. The company consistently beats earnings expectations, yet analyst estimates have remained essentially unchanged, rendering forward-looking multiples less meaningful due to their misalignment with Meta’s underlying momentum.
Wall Street remains broadly optimistic on Meta, with the stock carrying a Strong Buy consensus rating based on 42 Buy, three Hold, and just one Sell recommendation over the past three months. However, the average 12-month price target of $699.81 suggests a limited 2.5% upside from current levels.
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This apparent disconnect reinforces the view that the market may be underappreciating Meta’s underlying earnings growth trajectory and the potential impact of its ongoing AI initiatives.
Meta’s $14.3 billion investment in Scale AI underscores its confidence and ambition in leading the next wave of AI innovation. With strong revenue growth across its core platforms and nearly one billion users engaging with Meta AI, the company is operating from a position of considerable strength. The addition of Scale’s rich data assets and the launch of Alexandr Wang’s superintelligence lab are poised to enhance Meta’s capabilities across advertising, messaging, wearables, and the metaverse—unlocking significant new revenue opportunities.
While regulatory scrutiny and ethical considerations remain ongoing challenges, Meta’s strategic approach and execution continue to solidify its position as a key player in the AI-driven future. Despite this momentum, META shares still appear undervalued, presenting a compelling opportunity for long-term investors, particularly given Wall Street’s continued conservative stance on the company’s potential.
