Meta stock jumps 36% in September as Muse AI fuels rally

Meta Platforms Inc. is finally seeing the stock breakout that beleaguered bulls had been banking on.

The Facebook parent’s shares have jumped 36% in September following the release of its Muse personal AI assistant, which has risen quickly to the top of app charts and muffled concerns that heavy spending on AI won’t pay off. The stock is on pace for its best month since July 2013 and on the cusp of joining an elite group of companies worth at least $2 trillion.

“Muse clearly validates its AI strategy and position, after a year and a half where the stock was basically flat because people didn’t know if AI was going to be a net positive or a net negative,” said Rob Biederman, co-founder and managing partner at Asymmetric Capital Partners. “It’s logical that AI agents will become the front door to the internet for a lot of people, which puts the balance of power in Meta’s favor,” he added.

This month’s rally has marked a dramatic reversal for Meta, whose shares struggled for much of the year amid doubts about its costly AI efforts and legal risks stemming from lawsuits targeting its social-media business. Less than six weeks ago, Meta shares were down 18% for the year in the wake of a disappointing revenue forecast in late July, putting the stock among the 50 worst-performers in the S&P 500 through Aug. 18.

Since then, however, Meta is the third-best performer in the benchmark with a 43% gain. The recovery began after Meta agreed late last month to pay as much as $18 billion to settle a social-media lawsuit, removing a major overhang for the stock. But the biggest factor is excitement about new AI products and the potential revenue lift they could bring, which is giving investors like Biederman optimism that Meta shares have room to run.

In a sign of how impressed investors are with Muse, they’ve been dumping the shares of companies in a broad range of industries over fears about potential disruption, similar to selloffs earlier this year sparked by AI startup Anthropic.

Already, Meta has announced a grocery-selling partnership with Instacart-owner Maplebear Inc., as well as one with online travel agency Expedia Inc. At an event on Wednesday, Meta unveiled a number of products that analysts praised, including a palm-sized gadget for using Muse, as well as camera-free versions of its smart-glasses lineup.

“There’s still meaningful upside potential as Meta is in the early stages of releasing frontier models and AI-driven products beyond advertising,” JPMorgan analyst Doug Anmuth wrote in a Sept. 10 note raising his rating on the stock to overweight from neutral.

Of course, Meta still has a long way to go to proving it can make enough money from its AI efforts to justify the vast expense. Capital spending is expected to be nearly $140 billion this year, double the roughly $70 billion Meta spent in 2025. That figure is expected to swell to $197 billion next year and $215 billion in 2028.

The heavy spending is taking a toll. After generating $46 billion in free cash flow last year, Meta is expected to have negative free cash flow of $6.4 billion in 2026, and negative $29.2 billion next year.

That’s putting pressure on the company to deliver growth. Sales are expected to rise 26% to $254 billion in 2026 while net income is expected to expand 33% to $80.6 billion, according to the average of analyst estimates compiled by Bloomberg. However, revenue and profit growth is expected to slow next year to 20% and 9%, respectively.

Meta is priced at 21 times profit expected over the next 12 months, according to data compiled by Bloomberg. While that’s up significantly from a June low of less than 14 times, it’s roughly the average multiple the stock has traded at over the past three years and a slight discount to the Nasdaq 100 at 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,” Biederman said.

Wall Street remains widely positive on Meta with more than 90% of the analysts tracked by Bloomberg rating the stock a buy. But the shares are trading around the average price target, suggesting upside could be limited over the next 12 months.

Given the extent of the rally, Meta shares are vulnerable to a pullback considering how fast perceptions can change in the market for AI services, according Brandon Pizzurro, who helps oversee $29 billion in assets as chief investment officer at GuideStone Funds.

“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.

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