JPMorgan recommended buying Meta shares: its new AI assistant has strengthened its position

JPMorgan Chase, the largest bank on Wall Street, has upgraded its rating on Meta shares and now recommends buying them. The bank’s optimism stems from the launch of the company’s first personal AI assistant, Muse: JPMorgan believes that its focus on agent-based artificial intelligence and cutting-edge AI models will drive the stock’s growth. This decision is yet another sign that Wall Street’s attitude toward the company’s position in the field of artificial intelligence is improving, notes Bloomberg.

On Thursday, September 10, JPMorgan raised its rating on the shares of the company that owns social media platforms Facebook and Instagram from “neutral” to “outperform,” which is equivalent to a “buy” recommendation, according to Bloomberg. In addition, the bank raised its price target for the AI developer’s stock from $640 to $820. This implies growth potential of more than 25% from the closing price on September 9.

“Meta’s AI agent Muse is off to a strong start: on just its second day, it climbed to third place in the U.S. App Store, and initial user activity is roughly 10 times higher than that of the test groups,” — Bloomberg quotes a note from JPMorgan analyst Doug Anmuth.

"This shows that Meta is well-positioned to offer AI products to its approximately 4 billion users, and such widespread distribution gives the company a significant competitive advantage," Anmut said. However, monetizing Muse is not yet a priority for Meta, although the new app does offer paid plans, the analyst added. When the company is ready to monetize the product more aggressively, the potential market size, according to his estimate, could reach tens of trillions of dollars, CNBC reports.

The more successful Meta's AI projects are, the more computing power the company will need, Anmut noted. Because of this, he expects even greater pressure on Meta’s free cash flow in 2027 and 2028 and estimates that it could be negative, ranging from $65 billion to $75 billion. However, this forecast does not take into account potential revenue from monetizing new AI products, the analyst emphasized.

“And, most importantly, we believe that the core advertising business still has significant growth potential thanks to AI-driven improvements—more accurate content recommendations and increased engagement, more effective targeting and ad selection, as well as the creation of ad content using AI,” CNBC quotes Anmut as saying.

During Thursday’s trading session, Meta shares rose 1.5%, but then lost momentum and were down 0.3% at the time of this writing. The day before, the stock had gained 6.6% as Wall Street reacted positively to Muse’s prospects. Since their August low, Meta shares have gained 20%, but year-to-date, they are still down more than 1%, while the Nasdaq 100 technology index has risen by about 16%.

"The growth potential remains significant, as Meta is still in the early stages of launching cutting-edge AI models and AI-powered products outside of its advertising business," he wrote.

Meta’s underperformance since the start of the year reflects Wall Street’s more skeptical attitude toward the company’s AI ambitions, and the launch of Muse is helping to ease those concerns, Bloomberg explains. In its earnings report released in late July, the company presented a revenue forecast that disappointed investors, which intensified questions about its aggressive spending on AI infrastructure and the timeline for when those investments will begin to pay off, the agency writes.

A day earlier, Axios reported, citing sources, that Meta Platforms had acquired the Swedish AI startup Stilla.ai to accelerate the development of Meta Business Agent—a tool that facilitates transactions via WhatsApp, Messenger, and Instagram.

Following JPMorgan's upgrade, Bloomberg reports that more than 90% of analysts now recommend buying Meta shares or have issued an equivalent recommendation. The rest recommend holding the stock, and no analyst recommends selling it. The analysts’ average price target is about $750, which is 15% higher than the closing price on September 9.

This article was AI-translated and verified by a human editor