Just a month ago, Meta Platforms (META) CEO Mark Zuckerberg declared in a 6,500-word manifesto that everyone should have a free personal agent powered by artificial intelligence (AI) to help them with everything from relationships to work and hobbies. And Zuckerberg wants Meta to supply them.
The company recently made a big step in that direction by launching Muse AI. Meta says the agent can work on a user’s behalf as it interacts with apps, learns, adapts, and actually does work that the user requires.
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"It doesn’t just answer questions, it actually does the work. It helps people stay on top of things, takes tasks and projects off their plate, and turns long-term goals into action plans,” the company said in an announcement posted on Sept. 8.
The launch of Muse answers a central question that has faced Meta since Zuckerberg laid out his vision in August. Plus, it's getting good reviews from Goldman Sachs, with one analyst recently maintaining a “Buy” rating and a $725 price target for META stock, calling the Muse AI launch a catalyst.
Muse AI also helps answer a bigger question for Meta that has caused shares to be stagnant all year: How can Meta better monetize its AI and develop additional revenue streams to complement its powerful advertising business? The answer is now becoming clearer.
About Meta Platforms Stock
Meta is a dominant social media company that operates some of the most popular platforms in the world, including Facebook, Instagram, Messenger, Threads, and WhatsApp. The company boasts 3.6 billion people that use at least one of its apps each day.
However, META stock has been a disappointment so far this year, up only 1% year-to-date (YTD). Part of that has to do with the same concern facing many Big Tech companies — massive capital expenditures on servers, chips, memory, connectivity, and the construction of data centers capable of training and running AI. Meta is projected to spend between $130 billion and $145 billion on capex in 2026, and the company spent $31.08 billion in just the second quarter.
Meta's struggle to grow its share price is only tempered by the valuation. The forward price-to-earnings (P/E) ratio is a relatively reasonable 24.4 times right now, and in-line with the five-year mean.
www.barchart.com Meta Is Overly Reliant on Advertising
Meta reported strong Q2 revenue of $60.8 billion, up 28% year-over-year (YOY). But nearly all of that revenue came from advertising; the company generated $59.36 billion from ads across its platforms, up from $46.56 billion a year ago. The Reality Labs business — which Zuckerberg had previously hoped would help the company launch the Metaverse, where people could create avatars to live and work in the digital world — provided only $431 million in revenue while losing $4.62 billion.
However, there’s another line on Meta’s income statement: Other Revenue. This line item increased from $583 million in revenue to just over $1 billion in Q2, with CFO Susan Li saying much of that revenue is coming from Meta’s newly launched subscription effort. It’s here, combined with Muse AI, that I think Meta has the greatest chance for developing revenue streams that are complementary to its advertising business.
Meta’s Subscription Model Could Bring in Billions
Meta is rolling out Muse AI on iOS, Android, and on a website called muse.ai, plus it’s available on the WhatsApp platform. The company says that users will choose which apps Muse can connect to and how much access it gets; it will be able to do anything from reading and sending emails to making purchases.
The agent will be free for basic levels of service, with a sliding subscription range for users who want more access. Goldman Sachs noted that subscriptions can cost up to $100 per month, and analysts see more opportunities for monetization and commercialization of Muse AI over time.
It also pairs nicely with Meta’s other major subscription effort, Meta One, which provides greater AI usage and other premium features on Facebook, Instagram, and WhatsApp. Meta recently began offering single-product monthly subscriptions for those apps, priced at $3 or $4, as well as bundled subscriptions priced between $8 and $20 per month. Businesses and content creators can also subscribe for between $15 and $500 per month, depending on the level of service they seek.
“Meta One gives subscribers more self-expression features and AI usage, helps creators spend more time creating and less time guessing, and gives businesses new tools designed to help them grow,” Meta noted in an article post. “The core experience across our apps and Meta AI has always been free, and that’s not changing. Subscriptions unlock more specialized capabilities and expanded AI usage that go beyond what a free experience built for billions can offer.”
What Do Analysts Expect for Meta Stock?
Goldman Sachs' sentiment and price target are roughly in line with analysts’ expectations. Based on 54 experts with coverage, META stock has a consensus “Strong Buy” rating on Wall Street and a mean price target of $758.26, which is even higher than Goldman Sachs' target. That average price target represents potential upside of 14% from current levels.
Meta’s subscription products, anchored by Muse AI and Meta One, go a long way toward demonstrating the vision that Zuckerberg shared in his August manifesto. If the company is successful at building out AI subscription services, it should have a solid revenue stream to support the already strong advertising business.
www.barchart.com On the date of publication, Patrick Sanders did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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