Wall Street expects Meta’s AI agent to shape into a new revenue engine

Meta Platforms has captured the attention of Wall Street after the launch of its AI agent, Muse, on September 8th. Muse is an AI assistant capable of sending emails, booking travel, and completing transactions like selling a car on behalf of users. The free version is accompanied by subscription tiers priced at $20 and $100 per month for more extensive usage.

Since its debut, Meta's shares have surged more than 20%, surpassing the performance of the "Magnificent 7" group of US tech companies over the same period. This surge has propelled Meta's market capitalization by over $200 billion, pushing it to a seven-month high.

J.P. Morgan analysts see potential in Muse to become the most widely used consumer AI application since ChatGPT. The app, available on iOS and Android but currently exclusive to the US and Canada, has already amassed 2.8 million downloads in its first 12 days of launch. This early traction can be attributed to strong product-market fit, Meta's expansive distribution reach, and the availability of a free tier that lowers the barrier to trial and repeat use.

Early reviews indicate that Muse's functionality is resonating with users, especially its ability to execute multi-step tasks and workflows with minimal user intervention. This has sparked a tech rally on Wall Street, uplifting Meta shares by over 11% and boosting chipmakers such as AMD and Intel. AMD even reached a $1 trillion valuation for the first time. Michael O’Rourke, chief market strategist at JonesTrading, believes the market is interpreting Muse as a boon for the already bottlenecked CPU market.

Jefferies estimated that if Muse were to achieve 1 billion users by the end of 2027 and at least 3% of them transition to a paid version, it could generate $10.8 billion in annualized revenue. This estimation led Jefferies to raise its price target on Meta's stock to $875. UBS Global Wealth Management analysts also noted that Meta's Muse provides early evidence that consumer AI agents could achieve broad adoption, presenting new AI monetization opportunities beyond enterprise applications.

Out of the 64 brokerages covering Meta's stock, 57 have rated it as "buy" or higher, with a median price target of $760, according to data compiled by LSEG.