TLDR
- Meta stock climbed 27% in three weeks following the launch of its Muse AI agent
- TD Cowen raised its price target to $865 from $750, keeping a Buy rating
- Meta’s capital spending could approach $145 billion this year, pressuring free cash flow
- Muse hit number one on the iOS App Store with roughly 642,000 daily users in its first 12 days
- Analysts across Wall Street have raised price targets, with JPMorgan at $920 and Tigress Financial at $995
Meta Platforms stock closed at $777.59 on Friday, up 4.5% on the day and just shy of its 52-week high of $779.82. The gain caps a three-week run of 27% since the company unveiled its Muse personal AI agent.
The rally has pushed Meta’s valuation to a 21% premium over the S&P 500’s forward price-to-earnings ratio. That’s higher than 99% of trading days over the past five years.
TD Cowen raised its price target on the stock to $865 from $750 this week. The firm kept its Buy rating and cited Meta’s new VR and AI Audio Glasses along with an AI charm device unveiled at Connect.
Muse debuted at the company’s Connect event on September 23. CEO Mark Zuckerberg said the tool had already reached “millions” of users.
The agent climbed to the number one spot on Apple’s U.S. App Store. Reports put its daily active users at around 642,000 in its first 12 days, a faster start than ChatGPT saw at a similar stage.
How Meta Plans to Make Money From Muse
Zuckerberg told developers that Muse will stay free for most users. The company instead plans to take a small fee from transactions completed through the agent.
New partnerships back that plan. Muse now integrates with PayPal and Shopify, and Walmart, Best Buy and Instacart have also signed on.
Amazon, notably, blocked Muse from accessing its marketplace. That leaves a gap in Meta’s commerce ambitions for now.
Not every voice on Wall Street was equally impressed. Meta’s hardware push, including camera-equipped glasses, has drawn some privacy pushback that could slow adoption.
The Cost Side of the Ledger
Meta spent $72 billion on data centers last year to support Muse and its other AI tools. That figure could roughly double this year, with capital spending projected to approach $145 billion.
Free cash flow has fallen sharply as a result, and the company has paused share repurchases. Debt has also climbed.
Meta carries close to $700 billion in future supply and lease commitments on top of what’s already on its balance sheet. Next year, analysts expect revenue to grow 20%, but earnings per share are forecast to rise just 9%.
Advertising still makes up 98% of Meta’s revenue, though it wasn’t mentioned once during Zuckerberg’s 55-minute Connect keynote. Muse conversations are meant to stay private even from Meta itself, which could make the agent harder to monetize through ads.
Institutional investors own about 80% of Meta’s stock. NEOS Investment Management recently boosted its stake by 11.1%, buying 99,835 additional shares to bring its total to just over one million shares, worth roughly $563 million.
Insiders have been selling. Chief Accounting Officer Aaron Anderson sold 3,240 shares on September 3rd, and insider Christopher K. Cox sold 40,000 shares on September 21st, both under pre-arranged trading plans.
Meta’s 50-day moving average sits at $613.05, well below Friday’s closing price. The stock’s 52-week low is $520.26.
Meta last reported quarterly earnings on July 29th, posting $6.18 EPS against a consensus estimate of $7.19. Revenue came in at $60.80 billion, above the $60.22 billion analysts had expected. A quarterly dividend of $0.5250 per share is scheduled for payment on September 28th.
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