Meta stock has surged after the launch of its AI agent Muse, as investors get a clearer idea of how the company could make money from consumer AI. The launch has given investors a look at how Meta could turn AI into a new business beyond its traditional social media advertising model.
Muse has quickly gained attention from consumers after its launch. The AI agent has climbed app charts and recorded millions of downloads in its first two weeks, showing strong early interest in the product, according to Yahoo Finance.
Meta stock jumps after Muse launch
Meta shares jumped about 13% over the past week. The stock is also on track for its strongest monthly performance since July 2013. The rally is important because Meta had faced several periods of weakness earlier this year. The recent jump suggests investors are becoming more confident about the company's AI strategy after months of uncertainty around its large AI spending.
Futurum CEO Daniel Newman said Meta's AI strategy had shown signs of improvement before the Muse launch. However, those positive signals were difficult for investors to see because of concerns surrounding Meta's rising AI costs and other problems.
Meta faces high AI costs
One major concern has been Meta's huge spending on AI infrastructure. Investors have been questioning whether the money Meta is putting into AI will eventually produce enough revenue and profits.
{{/usCountry}}One major concern has been Meta's huge spending on AI infrastructure. Investors have been questioning whether the money Meta is putting into AI will eventually produce enough revenue and profits.
{{/usCountry}}Meta has also faced criticism over social media addiction claims. These legal and public concerns have added pressure on the company and its stock. Meta's Reality Labs business has been another major concern for investors. The division has recorded more than $85 billion in losses over the years, creating another financial burden for the company, according to Yahoo Finance.
AI spending worries investors
The wider AI industry has also faced growing concerns about risks and a possible slowdown in AI development. Those concerns have made investors more cautious about companies spending huge amounts of money on AI.
Much of the AI investment story this year has focused on chipmakers and businesses using AI to improve productivity. Semiconductor companies have benefited from the growth of agentic AI, while large companies have continued spending heavily on AI tools, according to Yahoo Finance.
Muse changes Meta AI strategy
Companies such as OpenAI, Anthropic and Google's Gemini had received much of the attention in consumer and agentic AI. Meta was not seen as the main focus of the AI race for much of the year. That changed after Meta launched Muse.
“Then out of nowhere came Muse,” Futurum CEO Daniel Newman told Yahoo Finance, highlighting how quickly the new product changed the conversation around Meta's AI strategy.
Meta builds its own AI models
Wall Street believes Meta's current AI push is partly the result of changes made to its strategy last year. Meta created its Super Intelligence Labs as part of a major effort to strengthen its AI capabilities. Meta has also moved toward developing more proprietary AI models. The company launched its closed Muse Spark model this year as part of that shift.
KeyBanc Managing Director Justin Patterson said Meta's AI team has made strong progress over the past year. Patterson told Yahoo Finance that the team “has been on fire” during that period. Investors are especially interested in Muse because it is aimed directly at consumers. Consumer AI has been difficult for many technology companies to turn into a large and profitable business.
How will Meta make money from Muse?
Meta's existing social media platforms mainly make money through advertising. Facebook and Instagram generate revenue by showing ads to users, but Muse currently does not use ads as its main business model. Instead, Meta plans to make money from transactions completed through Muse. The company plans to take a small fee or cut when users make transactions through the AI agent, according to Yahoo Finance.
Muse could earn money from transactions
This could give Meta a completely different way to make money from consumer AI. Instead of only selling advertising space, Meta could earn revenue when Muse helps users discover products, services or complete transactions. The transaction model is also important because it connects Muse directly to consumer activity. If users increasingly depend on the AI agent to complete purchases or other transactions, Meta could earn more money as the number of transactions grows.
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KeyBanc's Patterson said Meta has now managed to build a consumer-facing AI product at a time when many other companies have struggled to do so. He said this has changed the way Wall Street views Meta, with the company moving from being seen as a laggard to being viewed as a leader again.
More Muse users could boost revenue
Wall Street is now watching how quickly Meta can expand the Muse ecosystem. The focus is on whether Meta can attract more users and connect Muse with more services and platforms. More Muse downloads could create a larger potential revenue base for Meta. A bigger user base means more people could potentially use the AI agent for transactions.
More connectors could also increase Muse's earning potential. As Muse connects with more services and platforms, users could have more reasons to use the AI agent, which could lead to more transactions and more fees for Meta. That is why investors are closely watching Muse's revenue potential rather than only its download numbers. The key question for Meta is whether strong consumer interest can eventually turn into meaningful revenue and a return on the company's huge AI investment.
Analyst sentiment around Meta has also become very positive. The stock currently has 73 Buy ratings, six Hold ratings and zero Sell ratings. Several analysts have raised their price targets for Meta over the past week. The current consensus price target stands at $787, according to Yahoo Finance.
The main reason behind the latest Meta stock rally is therefore the possibility that Muse could turn consumer AI into a real business. Strong early downloads, Meta's new AI strategy and the planned transaction-fee model have given investors a clearer path toward monetising AI.
The bigger test for Meta will be whether Muse can turn its early popularity into sustained usage, more transactions and growing revenue. Wall Street is now watching the development of the Muse ecosystem to see whether the AI agent can deliver a return on Meta's massive AI spending.