Meta Platforms is finally delivering the kind of stock breakout that its long-standing bulls had been waiting for.
Shares of the Facebook parent have surged 36% in September following the launch of its Muse personal AI assistant, putting the stock on track for its strongest monthly performance since July 2013.
The rally has also brought Meta close to joining the small group of companies valued at more than $2 trillion.
The turnaround has been striking.
Meta shares struggled for much of the year as investors questioned whether the company’s enormous artificial intelligence spending would generate sufficient returns, while legal challenges against its social-media business added another source of uncertainty.
Less than six weeks ago, Meta was down 18% for the year following a weaker-than-expected revenue forecast in late July.
Through Aug. 18, the stock ranked among the 50 worst performers in the S&P 500.
Since then, however, Meta has gained 43%, making it the third-best performer in the benchmark, according to Bloomberg data.
Muse becomes the catalyst for Meta’s turnaround
The recovery initially gained momentum after Meta agreed late last month to pay as much as $18 billion to settle a social-media lawsuit, removing a significant overhang for investors.
But the bigger catalyst has been the company’s new AI products, particularly Muse, and expectations that the technology could eventually create new sources of revenue.
Introduced on Sept. 8, Muse is designed as a personal AI agent capable of handling multistep tasks.
Rather than simply answering questions, the assistant can find information across accounts, fill out web forms and negotiate and complete online purchases.
Users can access Muse through its dedicated application or WhatsApp.
The rapid interest in the product has helped change the conversation around Meta’s AI investments.
Muse overtook ChatGPT as the leading free iOS app in the US last Friday and recorded 730,000 downloads in roughly five days following its September 8 launch, according to Sensor Tower.
By Monday this week, the market intelligence company said Muse had surpassed 2.5 million downloads.
The app was also ahead of Anthropic’s Claude, xAI’s Grok and Meta’s existing Meta AI app on Apple’s US App Store.
Concerns that the company was spending heavily on infrastructure and technology without a clear path to monetization have increasingly been replaced by expectations that AI could strengthen Meta’s existing advertising, commerce and hardware businesses.
Meta Connect expands the Muse ecosystem
Meta’s annual Connect conference this week provided investors with another indication of how the company intends to build around Muse.
Rather than positioning the assistant as a standalone chatbot, Meta is developing a broader ecosystem in which Muse can be accessed through dedicated hardware and integrated into everyday tasks.
The company introduced Muse Charm, a small handheld device designed to provide direct access to Muse.
The device is expected to ship during the December holiday period, although Meta has not disclosed a price.
Charm is part of Meta’s effort to reduce its dependence on smartphone platforms controlled by Apple and Google.
Users will be able to access Muse directly through Meta’s own hardware instead of relying on AI applications running within traditional smartphone ecosystems.
Meta CEO Mark Zuckerberg has described the company’s broader ambition as building “personal superintelligence” — AI that understands users deeply and can be highly customized.
“It is actually quite clear personal superintelligence will not only come first; it will be much bigger and more important,” Zuckerberg said at the company’s conference.
“So we have shifted our focus to building the best devices for personal superintelligence,” he said, adding that Muse would also soon be available across Meta’s smart glasses lineup.
Meta also unveiled Meta VR Glasses, a smaller and slimmer device designed to bring capabilities associated with larger virtual-reality headsets into a more compact form factor.
The glasses will cost $1,299 and are scheduled to launch in spring 2027, adding another potential distribution channel for Muse and Meta’s broader AI ambitions.
Retail partnerships open a new monetization path
Meta is also seeking to connect Muse with the commercial activity that takes place across the internet.
At Connect, the company announced partnerships with Walmart, Best Buy, Sephora, Wayfair, Dick’s Sporting Goods and Gap.
The integrations could allow users to move from asking Muse about a product or service to completing a transaction, potentially giving Meta another way to monetize AI beyond advertising.
JPMorgan analysts led by Doug Anmuth raised their price target on Meta to $920 from $820 after the event.
The bank said Muse had the potential to become “the most widely used consumer AI application since ChatGPT.”
Morgan Stanley maintained an Overweight rating and a $775 price target.
The firm also suggested that Walmart’s participation could encourage other major retailers and platforms to join if Muse gains meaningful traction in shopping.
Citizens raised its Meta price target to $885 from $770 while maintaining an Outperform rating, pointing to the company’s increasingly AI-focused hardware ecosystem and early momentum around Muse.
KeyBanc analyst Justin Patterson raised his price target to $900 from $780, while Cantor Fitzgerald lifted its target to $860 from $680.
The broad wave of target increases has helped reinforce the view that Meta’s AI strategy could eventually translate into additional monetization opportunities.
Huge AI spending remains a key risk
The sharp rally, however, comes as Meta prepares to spend unprecedented amounts on AI infrastructure.
Capital spending is expected to approach $140 billion this year, roughly double the approximately $70 billion Meta spent in 2025.
That figure is expected to rise to $197 billion next year and $215 billion in 2028.
The spending has significant implications for Meta’s cash generation.
After producing $46 billion in free cash flow last year, Meta is expected to post negative free cash flow of $6.4 billion in 2026 and negative $29.2 billion in 2027.
That makes revenue and earnings growth increasingly important as the company finances its AI ambitions.
Analysts expect Meta’s sales to rise 26% to $254 billion in 2026, while net income is projected to increase 33% to $80.6 billion, based on the average of estimates compiled by Bloomberg.
The growth rate is expected to moderate in 2027, however, with revenue growth slowing to 20% and net income growth to 9%.
Valuation has recovered with the stock
Meta’s valuation has also expanded sharply alongside the rally.
The stock trades at about 21 times expected earnings over the next 12 months, according to Bloomberg data.
While that is significantly above its June low of less than 14 times earnings, it remains around the average multiple at which the shares have traded over the past three years.
It is also slightly below the Nasdaq 100’s forward earnings multiple of about 22 times.
“Right now Meta offers a below-market multiple for above-market growth, which is attractive on its own, but it also has massive scale and distribution, which are advantages that will be really hard for competitors to overwhelm,” Rob Biederman, co-founder and managing partner at Asymmetric Capital Partners, said in the Bloomberg report.
Wall Street’s view remains broadly positive.
More than 90% of analysts tracked by Bloomberg rate the stock a Buy, although Meta shares are now trading around the average analyst price target.
That suggests the stock’s latest surge has already incorporated a significant amount of optimism about Muse and Meta’s AI strategy.
Investors now face a higher bar
The speed of Meta’s recovery has also increased the risk of a pullback if the company’s AI products fail to deliver evidence of sustained adoption or monetization.
Brandon Pizzurro, chief investment officer at GuideStone Funds, which oversees $29 billion in assets, said the rapid change in sentiment surrounding AI companies could leave Meta vulnerable after such a large rally.
“Sentiment on the big players seems to change as often as new AI models get released, and something like Muse gives markets the sugar rush of a new catalyst, but there’s an increasingly high bar to impress investors, and rightful trepidation on whether these companies can deliver,” Pizzurro said in the Bloomberg report.
For Meta, the next phase of the rally will therefore depend on whether Muse can move beyond its initial popularity.
The company now has multiple avenues to pursue that goal, from advertising and commerce to smart glasses and dedicated AI hardware.
But with capital spending set to rise dramatically, investors will increasingly look for measurable evidence that the technology is translating into engagement, revenue and cash flow.
The post Meta stock surges 36% in September on Muse AI boom: can it breach the $2T mark? appeared first on Invezz
