Meta-platforms META The stock price has risen over 60% this year, hitting an all-time high of $576 per share on Wednesday. Investors are surely wondering if the social media pioneer's stock is headed for further upside.

To test the plausibility of this, we look at what caused the rise in Meta shares and estimate whether META actually has further upside potential from the current level.

Image source: Zacks Investment Research

META share: Strong financial performance

As shown in the EPS Surprise chart above, Meta has beaten the Zacks EPS Consensus for seven consecutive quarters and posted an average earnings surprise of 12.61% over the last four quarterly reports.

Indicating the company's increased likelihood, Meta last reported second-quarter earnings per share (EPS) of $5.16 in July, which beat estimates by 10% and rose 60% from $3.23 per share in the comparable quarter.

Image source: Zacks Investment Research

META receives positive analyst ratings

Due to Meta's strong financial performance and the continued increase in its stock price, analysts remain optimistic about the tech giant's prospects. In particular, of the 45 brokers that cover Meta stock and provide data to Zacks Investment Research, 39 have a strong buy rating.

Meta currently has an average broker recommendation (ABR) of 1.33 on a scale of 1 to 5 (Strong Buy to Strong Sell).

Image source: Zacks Investment Research

META's innovation and product expansion

Regarding the positive sentiment, analysts remained optimistic about Meta's capabilities in the artificial intelligence space. Hosting the annual conference today, Meta CEO Mark Zuckerberg said Meta AI is one of the most widely used AI assistants in the world, with nearly 500 million monthly users.

The highlight of the Meta Connect 2024 event was new Meta AI updates, including natural language interactions outside of text. The AI ​​voice interactions are now available on all of the company's major apps (Instagram, WhatsApp, Messenger, Facebook) and will compete against Alphabet's GOOGL. Google Gemini Live and OpenAI's enhanced speech mode.

Meta will also expand its business AI solutions to help companies better serve their customers, provide support and facilitate commerce. In addition, In addition, Meta presented updated versions of its virtual reality headset (Quest 3S VR) and gave a glimpse of its Orion augmented reality glasses, which the company touts as the most advanced AR glasses ever, combining the look and feel of regular glasses with immersive AR features.

Monitoring META’s share valuation

One reason for the explosion in Meta shares is the company's attractive valuation compared to many of its big tech peers. META currently trades at 26.3 times forward earnings, which is not an excessive premium compared to the S&P 500's 24.2 times.

The story continues

Furthermore, META is still trading at a significant discount to its ten-year high of 74.5X forward earnings, but slightly above the median of 25X during that period.

Image source: Zacks Investment Research

Conclusion

After such an outstanding rally year to date, Meta Platforms stock lands a Zacks Rank #3 (Hold). While there may be better buying opportunities in the future, it would not be a surprise to see META continue to rise. Notably, the Zacks Average Price Target of $579.19 per share still suggests 3% upside potential.

Want the latest recommendations from Zacks Investment Research? Download the 7 best stocks for the next 30 days today. Click here to get this free report

Meta Platforms, Inc. (META): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research