Meta Platforms Inc. (META) share closed up 11.43% at $741.25, as bullish Wall Street commentary over the company’s newly launched AI agent, Muse, reignited investor enthusiasm over the social-media giant’s artificial-intelligence strategy.
Wells Fargo analyst Ken Gawrelski raised his price target on Meta to $796 from $640, maintaining an overweight rating. The new target implies roughly 20% upside from Friday’s closing price. The upgrade comes ahead of Meta Connect, the company’s annual two-day AI showcase, which kicks off Wednesday.
Muse, unveiled earlier this month, is an AI agent that can execute tasks rather than merely answer questions — a departure from the chatbot-style offerings that have dominated the generative AI landscape. Meta is offering the product in a free tier alongside paid plans priced at $20 and $100 per month, depending on usage.
Investors will be watching closely at this week’s developer event for usage metrics on Muse and evidence that the product can translate into a durable revenue stream. Unlike rivals that have focused on enterprise-grade AI tools delivered through cloud platforms, Meta is betting on a direct-to-consumer model — a gamble that hinges on the company’s unrivaled distribution.
The bull case for Meta rests on a larger argument: that as AI chips, data centers, cloud infrastructure, and foundation models increasingly commoditize, the bulk of long-term value will accrue to the application layer — companies that build products and experiences directly for end users.
The analogy drawn from the 1990s internet boom is striking. Companies that laid the fiber-optic cables did not capture nearly as much value as the enterprises that built consumer-facing businesses on top of that infrastructure — names like Amazon, Alphabet, Uber, and Airbnb. Similarly, the iPhone succeeded not because consumers wanted to understand hardware, but because it offered a seamless on-ramp to the digital world. AI consumers, the argument goes, will want the same — embedded, working products rather than generic tools they must configure themselves.
Meta’s competitive positioning on this front is formidable. The company’s family of apps boasts 3.6 billion daily active users, giving it the largest consumer reach of any AI player. It is already using AI to boost user engagement and help advertisers improve campaign performance. Its mature advertising platform — built on network effects, user data, and high engagement — may prove to be the ideal monetization vehicle for free consumer AI.
Data from the Bank of America Institute lends support to this logic: only 3% of households with accounts at the bank are paying for AI services. That suggests consumers are reluctant to pay directly for AI tools, making an advertising-supported free tier the more plausible path to profitability — precisely Meta’s wheelhouse.
Despite Monday’s rally, Meta trades at less than 27 times earnings, with a forward price-to-earnings ratio below 20 — a comparatively modest valuation for a company squarely in the AI revolution. Not all signals are bullish. Meta recently paid $18 billion to settle a major lawsuit, and the legal overhang continues to weigh on sentiment. Meanwhile, actual adoption and monetization metrics for Muse remain unproven.
Chief Executive Mark Zuckerberg has framed Muse as an early step toward what he calls “personal superintelligence,” telling investors on the second-quarter earnings call that it would not be surprising if billions of people were using AI agents daily within five years. Whether Meta can transition from a social-media empire into a dominant AI application company will begin to show at this week’s Meta Connect — the first major test of whether the application-layer thesis can turn from narrative into numbers.
