Meta Platforms is enjoying the stock-market breakout its supporters had been waiting for: shares of the Facebook parent have jumped 36% in September, putting the stock on pace for its best month since July 2013 and within striking distance of the $2 trillion valuation club.
The catalyst is Muse, Meta's personal AI assistant, which climbed quickly to the top of app charts after its September release. The early enthusiasm has muffled investor doubts that Meta's enormous AI spending will ever pay off — doubts that had kept the stock roughly flat for the previous year and a half.
A dramatic reversal
The rally marks a turnaround for Meta, whose shares were down 18% for the year as recently as six weeks ago, following a disappointing revenue forecast in late July that left it among the 50 worst performers in the S&P 500 through mid-August. Since then the stock has gained 43%, making it the benchmark's third-best performer, according to Bloomberg data. 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. But the biggest driver is excitement over new AI products and the revenue they could unlock.
Investor confidence grows
"Muse clearly validates its AI strategy and position," said Rob Biederman, co-founder and managing partner at Asymmetric Capital Partners, in the Bloomberg report. He argued that AI agents are becoming "the front door to the internet for a lot of people, which puts the balance of power in Meta's favor." JPMorgan analyst Doug Anmuth raised his rating on the stock to overweight from neutral on September 10, writing that there is "still meaningful upside potential" as Meta releases frontier models and AI-driven products beyond advertising.
The spending question remains
Enthusiasm aside, Meta still has to prove its AI investments can pay for themselves. Capital spending is expected to reach nearly $140 billion this year — double 2025's $70 billion — and could swell to $197 billion next year and $215 billion in 2028. That will push free cash flow negative: after $46 billion of free cash flow last year, Meta is expected to burn $6.4 billion in 2026 and $29.2 billion in 2027. "There is an increasingly high bar to impress investors, and rightful trepidation on whether these companies can deliver," said GuideStone Funds chief investment officer Brandon Pizzurro.
Meta now trades at 21 times expected profit over the next 12 months, per Bloomberg data — up from a June low under 14 times but in line with its three-year average. More than 90% of analysts tracked by Bloomberg rate the stock a buy.
Sources:
Meta shares surge 36% as Muse AI fuels stock market rally — The Hindu BusinessLine (Bloomberg)
The catalyst is Muse, Meta's personal AI assistant, which climbed quickly to the top of app charts after its September release. The early enthusiasm has muffled investor doubts that Meta's enormous AI spending will ever pay off — doubts that had kept the stock roughly flat for the previous year and a half.
A dramatic reversal
The rally marks a turnaround for Meta, whose shares were down 18% for the year as recently as six weeks ago, following a disappointing revenue forecast in late July that left it among the 50 worst performers in the S&P 500 through mid-August. Since then the stock has gained 43%, making it the benchmark's third-best performer, according to Bloomberg data. 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. But the biggest driver is excitement over new AI products and the revenue they could unlock.
Investor confidence grows
"Muse clearly validates its AI strategy and position," said Rob Biederman, co-founder and managing partner at Asymmetric Capital Partners, in the Bloomberg report. He argued that AI agents are becoming "the front door to the internet for a lot of people, which puts the balance of power in Meta's favor." JPMorgan analyst Doug Anmuth raised his rating on the stock to overweight from neutral on September 10, writing that there is "still meaningful upside potential" as Meta releases frontier models and AI-driven products beyond advertising.
The spending question remains
Enthusiasm aside, Meta still has to prove its AI investments can pay for themselves. Capital spending is expected to reach nearly $140 billion this year — double 2025's $70 billion — and could swell to $197 billion next year and $215 billion in 2028. That will push free cash flow negative: after $46 billion of free cash flow last year, Meta is expected to burn $6.4 billion in 2026 and $29.2 billion in 2027. "There is an increasingly high bar to impress investors, and rightful trepidation on whether these companies can deliver," said GuideStone Funds chief investment officer Brandon Pizzurro.
Meta now trades at 21 times expected profit over the next 12 months, per Bloomberg data — up from a June low under 14 times but in line with its three-year average. More than 90% of analysts tracked by Bloomberg rate the stock a buy.
Sources:
Meta shares surge 36% as Muse AI fuels stock market rally — The Hindu BusinessLine (Bloomberg)
