Can Meta Platforms Sustain Its Unstoppable Momentum?

In the world of high-growth technology stocks, few stories have captured investor imagination quite like Meta Platforms (NASDAQ: META). The company's transformation from a social media giant to a metaverse pioneer has driven valuation multiples to stratospheric levels. But with a market capitalization exceeding $1.5 trillion and a forward P/E ratio of 35x, the question on every investor's mind is: can Meta sustain its momentum?

The Global Growth Engine

Meta's Q2 2025 results paint a picture of a company with extraordinary global reach. The $47.5 billion revenue figure, representing 22% year-over-year growth, was driven by robust performance across all regions. The US & Canada market alone contributed $20.4 billion, but it was the Europe and Asia-Pacific regions that showed particularly impressive expansion, with Europe generating $11.5 billion and Asia-Pacific $9.4 billion.

The company's user base has also continued to expand, with 3.48 billion Daily Active People (DAP) across its platforms. This 6.4% year-over-year growth is particularly impressive given the global saturation of social media platforms. More importantly, Meta has demonstrated its ability to monetize this user base effectively, with Average Revenue Per Person (ARPP) rising to $13.65, a 14.8% increase from Q2 2024.

Margin Expansion and Cost Management

Meta's financial performance has been equally impressive on the margin front. The company's operating margin expanded to 43% in Q2 2025, up from 38% in the same period in 2024. This margin expansion was achieved despite a 12% increase in costs and expenses to $27.07 billion, demonstrating strong cost management capabilities.

The CFO's guidance for Q3 2025 revenue of $47.5–50.5 billion suggests continued momentum, with the company projecting full-year 2025 expenses between $114–118 billion. Notably, capital expenditures are expected to remain high at $66–72 billion, primarily driven by infrastructure investments to support AI initiatives and business operations.

The Regulatory Quagmire

However, beneath this impressive financial performance lies a growing regulatory storm that could significantly impact Meta's long-term trajectory. In the EU, the company faces multiple challenges:

1. Political Advertising Restrictions: Meta's decision to cease accepting political, election, and issue-based advertising in the EU starting October 2025 is a direct response to the new Transparency and Targeting of Political Advertising (TTPA) regulation. This regulation imposes stringent requirements on political ads, including clear labeling of targeting criteria, sponsor information, and restrictions on personal data usage.

2. Antitrust Scrutiny: The European Commission is threatening daily fines of up to 5% of Meta's average daily worldwide turnover if the company doesn't modify its "pay-or-consent" data model under the Digital Markets Act (DMA). Meta has already been fined €234 million for breaching the DMA and is unlikely to make further changes, positioning itself for potential new antitrust charges.

3. Data Privacy Enforcement: The company was fined €1.2 billion for illegally transferring EU user data to the U.S., a violation of GDPR's international transfer rules. This fine followed the landmark Schrems II court ruling that highlighted the conflict between U.S. surveillance laws and EU privacy rights.

In the U.S., Meta faces its own regulatory challenges, including resistance to signing the voluntary code of practice for AI governance in Europe. The company's decision to pause AI feature rollouts in the EU reflects the growing regulatory friction.

The High-Valuation Dilemma

Meta's current valuation raises an important question: how much risk is investors willing to take for continued growth? At a forward P/E of 35x and a market cap of $1.5 trillion, the company is priced for continued double-digit growth. However, the regulatory risks outlined above could significantly impact Meta's ability to maintain current growth rates, particularly in the EU market.

The company's capital expenditures, while necessary for AI infrastructure and business expansion, also raise questions about long-term sustainability. With 2025 spending estimated at $66–72 billion, Meta must balance infrastructure investment with maintaining healthy profit margins.

Investment Implications

For investors considering Meta as a long-term holding, several key factors emerge:

1. Growth Sustainability: Meta's ability to sustain its current growth trajectory will depend on its success in emerging markets and its capacity to monetize its AI initiatives. The company's strong financial performance and expanding user base suggest it has the fundamentals to support continued growth.

2. Regulatory Risk Mitigation: The regulatory challenges, particularly in the EU, represent a significant headwind. Investors should monitor how these issues evolve and whether they impact Meta's ability to operate in key markets.

3. Valuation Justification: At current levels, Meta's valuation appears to be priced for perfection. While the company's financial performance is impressive, investors should consider whether the risks are appropriately factored into the stock price.

4. Diversification Considerations: Given the regulatory risks and the concentrated nature of Meta's business (primarily in digital advertising), investors should consider diversification across the technology sector.

Conclusion

Meta Platforms remains a compelling investment opportunity with a strong global growth story and impressive margin expansion. However, the regulatory risks, particularly in the EU, present a significant challenge to the company's long-term trajectory. Investors should carefully weigh these risks against the potential rewards when considering their position in META.

For those who believe in Meta's ability to navigate the regulatory landscape and continue its innovation in AI and the metaverse, the stock could offer substantial long-term upside. However, for more risk-averse investors, a cautious approach may be warranted until the regulatory environment becomes more predictable.

In the end, the question of whether Meta can sustain its unstoppable momentum may hinge on its ability to adapt to an increasingly complex regulatory environment while maintaining its core growth drivers.