Meta Shares Surge 35% in a Month on Muse AI Launch and Analyst Upgrade

Shares of Meta Platforms (NASDAQ: META) have soared approximately 35% over the past month, including an 11.34% gain in the latest session, as investor enthusiasm builds around the company's new artificial intelligence product, Muse.

The stock closed at $741.25 on September 21, fueled by a narrative that Meta can successfully monetize AI through its massive existing distribution channels.

AI Catalyst Sparks Upgrade

The rally gained momentum after the launch of Muse, Meta's new AI application, which reportedly reached the No. 3 spot in the U.S. app store shortly after its release. This apparent market validation provides investors with a tangible product tied to the company's significant AI spending.

Following the launch, JPMorgan upgraded Meta's stock to Overweight and raised its price target to $820, citing the potential of AI agents and continued growth in the company's core advertising business. Analysts see Meta's ability to deploy AI across Facebook, Instagram, and WhatsApp as a key competitive advantage.

Valuation and Spending Scrutinized

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Despite the strong performance, some valuation metrics suggest caution. According to Investing.com, a fair value model from FinQL places the stock's worth at $659.67, implying potential downside of over 11% from its recent closing price.

Furthermore, Meta's aggressive investment in AI infrastructure is weighing on its finances. The company has guided for $130 billion to $145 billion in capital expenditures for 2026. Its free cash flow fell sharply to $784 million in the second quarter from $8.55 billion a year prior, as reported in recent coverage.

Earnings Test Looms

Investors will be closely watching Meta's next earnings report, tentatively scheduled for October 28, for proof that its AI investments are translating into financial results. Wall Street consensus expects the company to report revenue of $63.25 billion and earnings per share (EPS) of $6.74 for the quarter.

This report will be critical, as the company missed EPS estimates by 13.81% in its last quarterly announcement, which triggered a 9.16% drop in its share price. According to Investing.com data, analyst EPS estimates for the upcoming quarter have also declined by 8.49% over the past 60 days.