META Rides on Solid Momentum in Ad Business: A Sign of More Upside?

3 min read

Meta Platforms META is benefiting from solid momentum in its advertising business. In the first quarter of 2026, the company reported a 33% year-over-year increase in family of apps ad revenue, reaching $55 billion.

This growth was driven by a healthy 19% increase in ad impressions across all regions, fueled by higher engagement, user growth and ad load optimizations. The global average price per ad rose 12%, reflecting improved ad performance, stronger macroeconomic conditions and, favorable currency movements.

A key factor behind this momentum is Meta Platform’s ongoing investment in artificial intelligence to enhance both user and advertising engagements. AI is heavily dependent on data, of which META has a trove, driven by its more than 3.56 billion daily users. Meta Platforms continues to see strong engagement trends on Instagram Reels, with watch time up 10% and Facebook video time up 8% globally in the first quarter of 2026. AI-translated videos are now watched weekly by more than 500 million users on Facebook and Instagram. Threads continue to grow with more than 150 million daily active users.

Meta Platforms’ generative AI advertising tools are gaining strong traction, with more than 8 million advertisers using at least one GenAI ad creative tool in the first quarter of 2026. Video generation tools improved conversion rates by more than 3% while adoption among small and medium businesses has been particularly strong.

Meta Platform’s strong demand in its ad business is fueling robust financial results and is expected to benefit the company’s top-line growth. For the second quarter of 2026, the company expects total revenues between $58 billion and $61 billion.

META Faces Stiff Competition

Meta Platforms is facing stiff competition from competitors like Snap SNAP and Reddit RDDT. Both Snap and Reddit are expanding their portfolio to compete in the rapidly growing digital ad market.

Snap is benefiting from strong revenue growth, driven by improved advertising demand and the expansion of direct revenue streams. In the first quarter of 2026, Snap reported that advertising revenues reached $1.24 billion in the quarter, up 3% year over year, driven primarily by growth in direct response advertising.

Reddit is benefiting from strong demand in its advertising business, which has become a key growth driver of the company’s impressive financial performance and future growth prospects. In the first quarter of 2026, Reddit reported total revenues of $663 million, up 69% year over year, with advertising revenue growing even faster at 74% to $625 million.

META’s Share Price Performance, Valuation, and Estimates

META’s shares have lost 7.3% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s return of 17.4%.

META Stock Performance

META shares are overvalued, with a forward 12-month Price/Sales of 6.36X compared with the Internet - Software’s 4.4X. META has a Value Score of C.

META's Valuation

The Zacks Consensus Estimate for 2026 earnings is pegged at $33 per share, which has increased 10.88% over the past 30 days. This suggests 40.49% year-over-year growth.

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

Meta Platforms currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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META Rides on Solid Momentum in Ad Business: A Sign of More Upside?

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