Is Meta Still a Buy Despite a 650% Rally? A Case for the Unseen Power of Data, Capital Discipline, and AI's Next Frontier

In the world of investing, few stories in the past decade have been as audacious as Meta Platforms' (META) 650% rally. From the troughs of 2020 to the heights of 2025, the company has transformed from a metaverse skeptic's cautionary tale into a tech titan with a $2.8 trillion market cap. Yet, as the dust settles on this meteoric rise, a critical question lingers: Is Meta still a buy?

The answer, for the long-term investor, lies in three pillars: Meta's unparalleled data moat in AI, its disciplined capital allocation, and a valuation that remains compelling relative to its peers. These factors suggest that the company is not just surviving in the AI arms race—it is shaping the rules of the game.

The Data Moat: Meta's Invisible Fortress in AI

Meta's true strength does not reside in its stock price but in the invisible fortress it has built around its data. With 3.8 billion monthly active users across Facebook, Instagram, WhatsApp, and Messenger, Meta generates a deluge of multimodal data—text, images, videos, and real-time interactions—that is unmatched in scale and diversity. This is not just noise; it is the raw material for training the next generation of artificial intelligence.

Consider the Andromeda ads retrieval engine, a system that sifts through tens of millions of ad candidates to deliver hyper-personalized results. This engine is a dual-purpose machine: it drives Meta's $140 billion annual ad revenue while simultaneously feeding its AI models with real-world user behavior. The feedback loop is self-reinforcing. The more data Meta collects, the better its models become at predicting user intent—and the more effectively it monetizes those insights.

Meta has also weaponized its data advantage through strategic acquisitions. Its $14.3 billion investment in Scale AI, a leader in expert data labeling, ensures that the company has access to high-quality training data for advanced reasoning models. This move has not only disrupted the AI data supply chain but also injected elite talent into Meta's ranks. The hiring of Scale AI's founder, Alexandr Wang, to lead a new “superintelligence” lab is a signal that Meta is preparing for the next frontier of AI—systems that can reason, plan, and act autonomously.

Capital Allocation: Building for the Long Game

Meta's ability to allocate capital effectively has been a quiet but powerful engine of growth. While its P/E ratio of 28.85 may seem high at first glance, it pales in comparison to the 40.11 P/E of the NASDAQ 100 and the 3.9 PEG ratio of Tesla (TSLA). When adjusted for growth, Meta's valuation appears far more attractive.

The company's Return on Invested Capital (ROIC) is another standout metric. Meta's ROIC-WACC ratio is positive, indicating that it generates returns that exceed its cost of capital. This is critical in an era where AI and metaverse projects require massive upfront investments. Meta's current ratio of 2.66—a measure of liquidity—ensures that it can fund these initiatives without overleveraging.

Moreover, Meta has been strategic in its talent acquisitions. The hiring of seven OpenAI researchers and the integration of FAIR (Fundamental AI Research) into Reality Labs have created a research ecosystem that is both cutting-edge and product-focused. This is not just spending—it is a calculated investment in dominance.

Undervaluation in the Magnificent Seven: A Contrarian Edge

Meta's valuation has historically been a point of contention. In 2025, however, it ranks as the second-cheapest among the Magnificent Seven, behind only Alphabet. This is no accident. While competitors like Apple and Amazon are grappling with regulatory headwinds and stagnant growth, Meta is doubling down on AI.

The company's open-source strategy—epitomized by the Llama 3 model—has further insulated it from regulatory risk. By positioning itself as a champion of democratized AI, Meta has crafted a narrative that aligns with pro-European antitrust sentiments and shields it from the scrutiny faced by closed-source rivals like OpenAI and Anthropic.

Consider the math: Meta's Llama 3 model is available under permissive licenses, fostering a developer ecosystem that rivals those of Microsoft and Google. This ecosystem is not just a cost center—it is a revenue multiplier. The more developers build on Meta's AI stack, the more the company can monetize through cloud infrastructure, enterprise tools, and advertising.

The Investment Thesis: Buy for the Long Haul

Meta's 650% rally may have priced in much of its near-term success, but the long-term story is only beginning. The company's data moat, strategic capital allocation, and undervalued position within the Magnificent Seven create a compelling case for continued growth.

For investors, the key is to look beyond the noise of short-term volatility. Meta is not just a social media company anymore; it is a foundational player in the AI infrastructure of the next decade. Its ability to leverage its data advantage, invest in cutting-edge research, and maintain disciplined capital allocation positions it as a rare combination of defensive moat and offensive potential.

In a world where AI will redefine industries, Meta is not just playing the game—it is writing the rules. And for those with a 10-year horizon, that is a powerful position to own.