Key Highlights

  • Meta rose more than 11% on Sept. 21 as Muse hit No. 1 on Apple's U.S. App Store and Wells Fargo lifted its target to $796 from $640.
  • Shopify said on Sept. 22 that Muse will offer agentic checkout with Shop Pay on all Shopify stores, while Amazon blocked the agent.
  • Q2 Revenue rose 28% to $60.80 billion, but capex of $31.08 billion cut free Cash Flow to $784 million; Q3 guidance is $61 billion to $64 billion.
  • Shares closed near $741 after the rally, roughly 30% higher over three months but still about 5% lower over the past 12 months.

Meta Platforms, Inc. (NASDAQ:META) jumped more than 11% on Monday, Sept. 21, after two pieces of news came together: Wells Fargo (NYSE:WFC) raised its price target on the stock to $796 from $640, and the company's new Muse AI assistant reached the No. 1 spot on Apple's (NASDAQ:AAPL) U.S. App Store. Several market reports put the gain at about 11.3% to 11.4%, with the shares closing near $741.

Wells Fargo analyst Ken Gawrelski kept a Buy rating and argued that Meta's recent AI launches are finally giving the company a stronger narrative behind its AI spending. He pointed to the Muse Spark models and the Muse assistant as signs that Meta's AI products are starting to connect with consumers. The chart position gave investors a concrete, visible data point for that argument only about two weeks after the app launched.

The rally also came two days before Meta Connect, the company's annual developer and product conference, which opens on Sept. 23. That timing put Meta's AI roadmap and its heavy infrastructure spending back at the center of the debate over the stock.

Inside the Muse Breakout

Muse is Meta's personal AI agent, built on the company's Muse Spark family of models. Its launch came on Sept. 8. It climbed past established rivals, including OpenAI's ChatGPT, to the top of Apple's U.S. free-app chart. Estimates of its download totals differ from one report to another, so the chart ranking is the more reliable measure of its early traction.

The product is part of a broader overhaul of Meta's AI effort. Meta spent much of last year dealing with delayed AI models and questions about the return on its infrastructure spending. Since then, CEO Mark Zuckerberg has invested heavily in the AI team, including hiring Scale AI co-founder Alexandr Wang as chief AI officer.

Commerce is the next step. On Sept. 22, Shopify (NYSE:SHOP) CEO Tobi Lutke announced on X that Shopify will partner with Muse "to enable agentic checkout with Shop Pay on all Shopify stores." Zuckerberg said in a separate post that the Partnership would make discovery and checkout easier within Muse. At the same time, Amazon (NASDAQ:AMZN) asked to be removed from Muse's list of supported shopping destinations, citing its rules against automated shopping tools. That split between retailers is likely to shape how useful Muse becomes as a shopping agent.

Second-Quarter Results and the Cost of the AI Push

Meta's latest reported quarter shows both why investors are excited and why they have been cautious. For the three months ended June 30, the company reported on July 29 that revenue rose 28% year over year to $60.80 billion. Ad impressions increased 14%, the average price per ad rose 12%, and family daily active people averaged 3.60 billion in June, up 3%.

Profit moved the other way. Total costs and expenses jumped 55% to $42.03 billion, including $2.40 billion of charges related to legal proceedings and $1.18 billion of severance tied to a May 2026 headcount reduction. Operating Income fell 8% to $18.78 billion, the Operating Margin narrowed to 31% from 43%, and Diluted Earnings per Share fell to $6.18 from $7.14.

Spending on infrastructure dominated the cash flow statement. Capital expenditures, including finance Lease payments, reached $31.08 billion in the quarter, and free cash flow dropped to $784 million from $8.55 billion a year earlier, even though Operating Cash Flow was $31.86 billion. Meta ended June with $90.26 billion in cash and marketable securities and $83.66 billion of long-term debt.

For the third quarter, Meta guided revenue to $61 billion to $64 billion. It raised the low end of its full-year expense outlook to a range of $165 billion to $169 billion and narrowed 2026 capex guidance to $130 billion to $145 billion. The company said it still expects 2026 operating income to exceed 2025's.

Where Meta Stands in the AI Race

Meta's Advertising engine, the Family of Apps segment, generated $23.39 billion of operating income in the second quarter. Reality Labs lost $4.62 billion on revenue of $431 million. The Investment case for the AI build-out rests on the ad Business funding new products that can eventually earn money on their own.

Muse puts Meta in more direct competition with OpenAI, Google (NASDAQ:GOOGL) and other assistant makers for consumer attention, and the Shopify deal extends that competition into e-commerce. Wall Street has become more positive. Citi recently placed Meta on an upside 90-day catalyst watch ahead of Connect, with an $800 price target, and the consensus is Strong Buy based on 38 Buy and six Hold ratings, with an average price target of $763.67. Before Monday's rally, the shares were roughly 30% higher over three months but still about 5% lower over 12 months.

Risks Behind the Rally

The same factors that drive the upside also create risk. Capex of up to $145 billion this year has already pushed quarterly free cash flow close to zero, and the payoff from consumer AI products is unproven. App-store rankings can be volatile, and early downloads do not guarantee lasting engagement or revenue.

Legal exposure is significant. In its July outlook, Meta said it continues to see scrutiny of youth-related issues in several markets and has a number of youth-related trials scheduled in the U.S. this year, which "may ultimately result in a material loss." Agentic shopping also raises new questions, as Amazon's decision to block Muse shows. After an 11% one-day move, the valuation now builds in a meaningful amount of optimism about how these products turn out.

Meta Connect Takes Center Stage

Meta Connect begins on Sept. 23, and Zuckerberg is scheduled to give a keynote expected to cover the company's next AI products and wearable devices, including updates on Muse and future models. Investors will watch for details on monetization, the rollout of commerce features with Shopify, and any new usage figures for Muse.

Beyond Connect, Meta's third-quarter report, typically released in late October, will show whether revenue lands within the $61 billion to $64 billion guidance and whether spending remains on the path management set out in July.