Wall Street has spent much of the past year debating whether Meta’s enormous AI spending would ever pay off beyond better ads. On September 10, one of the bank’s biggest skeptics changed his answer.
JPMorgan analyst Doug Anmuth upgraded Meta Platforms and raised his price target sharply. Arguing the company’s new AI agent and frontier models open a growth path that goes well beyond the advertising business Meta has leaned on for years.
JPMorgan’s makes an upgrade on Meta stock after its Muse AI release
JPMorgan moved Meta to Overweight from Neutral and lifted its price target to $820 from $640 in a note published September 10. The new target implies roughly 25% upside from the September 9 closing price, according to GuruFocus. A notable jump from where the bank stood on the stock just months earlier.
Anmuth’s reasoning is centered on timing. He wrote that there is still meaningful upside potential for Meta, because Meta is in the early stages of releasing frontier models and AI-driven products beyond advertising, pointing specifically to the Muse AI agent and Meta Model API access.
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The analyst also credited Meta’s Superintelligence Lab with essentially delivering on its goal of reaching the AI frontier within a year, citing an accelerating cadence of Muse Spark model releases that culminated in Muse Spark 1.3, which he said is now competitive with cutting-edge models from OpenAI and Anthropic.
Looking ahead, Anmuth pointed to an upcoming model internally dubbed Watermelon, which he expects to unlock further opportunities across consumer products, engagement, advertising and internal efficiency.
Muse’s early traction and what it means for revenue
Meta’s Muse AI has only been available for a few days, but JPMorgan already has data to point to. The agent reached as high as number three in the U.S. App Store on its second day alone, with early usage running at roughly ten times that of internal training cohorts.
Monetization is not the near-term priority for Muse, Anmuth noted, but he also pointed to longer-term opportunities from take-rate commissions and subscriptions in a market he sized in the tens of trillions of dollars.
That optimism comes with a real cost attached. Anmuth is now projecting Meta’s capital expenditures at $243 billion in 2027 and $284 billion in 2028, both above Wall Street consensus, underscoring the enormous cash demands required to support the company’s AI buildout, as reported by Investing.com.
Even with that spending backdrop, Anmuth argued there is still meaningful headroom in core advertising from AI-driven improvements tied to content recommendations, better ad targeting and retrieval, and AI-generated ad content.
How Meta stock has reacted to JPMorgan’s call
Meta shares are up about 20% from their recent 52-week lows but were still roughly flat for the year heading into September 10, compared with an approximately 12% gain for the S&P 500 over the same stretch. That gap is central to JPMorgan’s argument that the stock has room to catch up.
Anmuth’s new price target is built on 23 times his 2028 earnings estimate of $35.44 a share. A multiple he said could prove conservative if Meta’s AI products start converting into revenue faster than expected, according to the original report on Investing.com.
The swing in tone is notable given where JPMorgan stood just months ago. The bank had actually downgraded Meta to Neutral from Overweight in April, cutting its target to $725 from $825 the day after Meta’s first-quarter earnings, when a surprise increase in capital spending guidance helped send shares down more than 10% in a single session, TheStreet reported.
JPMorgan is not alone in its renewed optimism. KeyBanc maintained an Overweight rating with a $780 price target after the Muse launch, while Bernstein reiterated an Outperform rating with an $800 target. Citing Meta’s strength in AI-driven advertising.
What it means for Meta investors
For investors, JPMorgan’s upgrade is less a claim that Meta has already proven its AI bet and more a wager that the market is underpricing the company’s early product momentum.
The bank is betting Muse and other future models like Watermelon become real and meaningful growth drivers as Meta expands beyond advertising. This helps justify the enormous capital spending required to build out its AI infrastructure.
That bet is not without risk.
The projected free cash flow deficit assumes none of Meta’s AI products generate meaningful revenue in the next two years. This means the investment case is largely dependent on Anmuth’s forecasts. A move to be conservative rather than optimistic.
Still, the size of the target increase and the swing from a downgrade earlier this year to an upgrade earlier this year now suggest Wall Street’s patience with Meta’s AI spending may be growing, even if the payoff for shareholders remains, by JPMorgan’s own admission, still a few years away.
The more bullish view is that Meta may now be reaching a point where evidence of product adoption is beginning to arrive before the full financial payoff — in other words, giving investors a clearer reason to tolerate the enormous upfront cost
Related: Jim Cramer sends a strong message to Meta stock investors
