Meta Platforms META is benefiting from its strategic investments in artificial intelligence, which are driving significant improvements in ad engagement and business performance. The company’s focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger, and Threads — is driving user as well as advertising engagement. In the second quarter of 2026, Family of Apps ad revenues increased 27% year over year to $59.4 billion. Ad impressions rose 14%, while the average price per ad increased 12%, partly reflecting improved ad performance.
AI-powered recommendation and ranking systems are strengthening engagement across META’s platforms. Instagram time spent grew double digits year over year, while Facebook video time spent increased 9% globally. Meta Platforms is using large language models to better understand content and user preferences, enabling more personalized recommendations across Feed and Reels.
In the second quarter of 2026, the deployment of Meta Generative Recommender and other advanced models led to an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook. More than 9 million small businesses now use at least one of Meta’s AI-powered ad creative tools. Its Advantage+ AI-powered advertising solutions also surpassed a $75 billion annual revenue run rate in the quarter, highlighting growing advertiser adoption.
Meta Platforms expects continued gains from AI-powered recommendations and advertising optimization. With strong user engagement, expanding AI capabilities, and a massive advertiser base, Meta Platforms appears well positioned to maintain its advertising momentum. For the third quarter of 2026, the company expects revenues between $61 billion and $64 billion.
How Competitors Fare Against META
Despite Meta Platforms’ expanding portfolio, the company faces stiff competition from Reddit RDDT and Snap SNAP. Both companies are expanding their footprint in the AI space.
Reddit Max is emerging as a key AI-driven growth catalyst. The launch and rapid adoption of Reddit Max, an AI-driven suite for ad automation and optimization, has delivered significant results. Advertiser usage of Max grew by more than 60% in the second quarter of 2026 from the first quarter of 2026, and revenues from Max campaigns increased by more than 150%. Features like tailored creatives and dynamic product ads are helping brands achieve better outcomes, such as Lenovo’s 40% higher purchase value with Max campaigns compared to standard campaigns.
Snap’s flagship product, Snapchat, reached 971 million monthly active users and 493 million daily active users in the second quarter of 2026, driven by continued adoption of Augmented Reality Lenses, Spotlight and AI-powered features. Key growth drivers include its AI-powered Smart Campaign Solutions, AI Sponsored Snaps, Sponsored Snaps and Dynamic Product Ads.
META’s Share Price Performance, Valuation, and Estimates
META’s shares have rallied 13.8% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s return of 22.5%.
META Stock Performance
Image Source: Zacks Investment Research
META shares are overvalued, with a forward 12-month Price/Sales of 8.36X compared with the Internet Software industry’s 5.52X. META has a Value Score of C.
META Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $31.38 per share, which has decreased 1.07% over the past 30 days. This suggests 33.59% 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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This article originally published on Zacks Investment Research (zacks.com).