Meta Platforms, Inc. (NASDAQ:META) is making headlines after launching two new AI models, Muse Wonder and Muse Wonder Full, and its Muse AI agent is gaining popularity, though some analysts say Muse will take time to turn into real revenue. The stock ranks #5 on our list of the 8 best-performing stock picks by Claude AI.
Bull Case: Muse Gives Meta a New Way to Make Money
Meta can push Muse to billions of people who already use its apps, so the agent can spread faster than a stand-alone app from a rival. JPMorgan said Muse could become the most widely used consumer AI app since ChatGPT. Muse launched last month and helps users with tasks such as shopping and travel. Meta’s business agents already serve more than one million businesses every week on WhatsApp and Messenger. That gives Meta a path from the ad a user sees to the chat and the final sale, so it can learn which ads lead to purchases.
AI is also helping the ad business today. Second-quarter revenue grew 28% year over year. Ad impressions rose 14% and the average price per ad rose 12%. AI improvements lifted Facebook ad conversions by 15.7%. Ironvine Capital Partners says Meta’s heavy AI spending is strengthening its ad platform, and you can see what the fund wrote about Meta here.
Photo by Mohamed Hadji on Unsplash
Meta’s other revenue, which is driven by WhatsApp paid messaging and subscriptions, grew 73%. Magellan Global Opportunities Fund looks for companies with lasting competitive advantages and highlighted Meta in its second-quarter letter. Read why Magellan sees Meta as a long-term opportunity.
Bear Case: Meta Pays First and Earns Later
Meta plans to spend heavily on AI infrastructure again in 2026, and free cash flow fell sharply in the second quarter. Wedbush said Muse looks promising but that near-term monetization is likely limited. Reality Labs also keeps losing money, and investors have to wait to see whether smart glasses ever pay off.
The new Wonder models add to the doubt. Meta gave no benchmark results or comparisons with rival models when it launched them. Polymarket gives Meta only a 3.5% chance of having the top AI model at the end of October, against 70% for Google. If the business agents end up as a feature and not a paid product, the AI spending will be hard to justify.
Valuation: A Fair Price If the Growth Holds
Meta trades at about 23.6 times forward earnings. That is close to Meta’s own five-year average of 22 and almost double the sector median of 12.3. Revenue grew 27.65% year over year, and analysts expect revenue growth of 26% in 2026 and 21% in 2027. Earnings growth is slower. Analysts expect earnings per share to rise 2.6% in 2026 and 13% in 2027. Meta’s forward PEG ratio is 1.19, below the sector median of 1.28, so the price fits the growth analysts expect. Rowan Street Capital argues that Meta’s business results have outpaced its stock rally, and its letter lays out that case.
While we acknowledge the risk and potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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