Wall Street Excited by Meta AI Revolution but Worried About Heavy Spending

Meta Platforms Inc. remains a key investment target in the AI space, with Wall Street weighing the commercial potential of its Muse AI platform against rising capital costs and the need to sustain growth in its core advertising business.

Analysts remain optimistic about Meta's AI ambitions. However, the company's spending plans and potential funding needs have raised questions about future returns.

Guggenheim Sees Muse as Transformative

Guggenheim Securities analyst Michael Morris maintains a Buy rating and a $850 price target, saying Meta's operating performance remains strong despite investor focus on the company's capital needs and the new Class C share structure.

Morris told CNBC on Thursday that Muse is a "transformative product" and said its early trading activity reinforces the monetization thesis.

He highlighted transaction values exceeding $200 per trade and sees potential revenue from commerce, enterprise tools, and interactions between consumers and business agents.

He also acknowledged that some companies may resist integrating with Muse, but believes strong consumer adoption will force supplier participation over time.

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RBC Says Core Ad Business Must Fund AI Buildout

RBC Capital Markets analyst Brad Erickson told CNBC on Thursday that Meta's business continues to grow strongly, but that momentum needs to persist if investors are to support the company's massive AI spending.

He described Muse as a significant long-term option for the business, but warned that Meta is likely to burn through cash and could issue stock next year to raise funds.

Erickson said Meta's current-quarter guidance remains strong enough to support the investment thesis for now, while noting that future negotiations around Muse will depend on who controls customer relationships and how liability is allocated when agents offer third-party products or services.

BNP Paribas Raises Meta Price Target to $940

BNP Paribas senior analyst Nick Jones reaffirmed an Outperform rating on Thursday and raised his price target from $885 to $940.

Jones said Meta's third-quarter family of apps revenue reached $64.2 billion, above the consensus estimate of $62.8 billion, while advertising revenue came in at $63.1 billion, above the expected $61.8 billion.

He noted that despite $9.9 billion in legal costs, diluted earnings per share came in at $3.83, above the consensus estimate of $3.56. Capital expenditures totaled $34.9 billion, below the $41 billion estimate.

For the fourth quarter, Meta guided revenue of $73 billion to $76 billion, versus a consensus of $73.6 billion. The company expects 2026 capital expenditures of $135 billion to $145 billion.

Jones said Muse shows strong commercial intent, but operating costs remain high. Meta aims to improve Muse's cost efficiency by more than 10 times by 2027, while prioritizing adoption and user engagement before broader monetization.

Across the three views, analysts remain constructive on Muse and Meta's core business, but capital intensity, funding needs, and execution capability remain central to the outlook.

META stock movement: Pre-market trading data on Friday showed Meta Platforms shares down 0.35% at $646.58.