Wall Street expects Meta's AI agent to shape into a new revenue engine

Wall Street has turned bullish on Meta Platforms, betting that its new AI agent Muse could open a new revenue stream for the social media giant and reshape the company's AI monetization prospects.

Muse, launched on Sept. 8, is an AI assistant that can send emails, book travel and complete transactions such as selling a car on behalf of a user. The basic version is free, with subscriptions priced at $20 and $100 a month for heavier use.

Since its launch, shares of Meta Platforms have surged more than 20%, outpacing the "Magnificent 7" group of US tech companies during the period. Shares have added over $200 billion in market capitalization to touch their highest level in more than seven months as of last close.


"While it is still early, we believe that Muse has the potential to become the most widely used consumer AI application since ChatGPT," JP Morgan analysts said in a note, crediting the app's early traction to strong product-market fit, Meta's distribution reach and a free tier that lowers the barrier to trial and repeat use.

The Muse app, available on iOS and Android but only in the US and Canada regions, has clocked 2.8 million downloads in the first 12 days of launch, according to data from Apptopia.

If compared on similar metrics to the first 12 days of OpenAI's ChatGPT, Muse has 1.8 million downloads versus 1.3 million for ChatGPT.

Early reviews suggest "functionality is resonating with users, particularly agent's ability to execute multi-step tasks and workflows with limited user intervention", BofA Global Research analysts said.

Enthusiasm around Muse sparked a Wall Street tech rally on Monday, lifting Meta shares more than 11% and boosting chipmakers, including AMD and Intel, with AMD crossing the $1 trillion valuation mark for the first time.

"The market has interpreted Muse as a boon for the already significantly bottlenecked CPU market," said Michael O'Rourke, chief market strategist at JonesTrading.

Brokerage Jefferies estimated that if Muse could see 1 billion users by end of 2027 and at least 3% transition to a paid version then it could result in $10.8 billion in annualized revenue, as the brokerage raised its price target on Meta's stock to $875.

UBS Global Wealth Management analysts said in a note Meta's Muse provides "early evidence that consumer AI agents could achieve broad adoption, offering new AI monetization opportunities beyond enterprise application".

Of the 64 brokerages that cover Meta's stock, 57 rate it "buy" or higher with a median price target of $760, according to data compiled by LSEG.