Muse and agentic AI are in the spotlight as investors head for Meta's Q3 earnings
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- Meta's Muse has generated a lot of buzz ahead of the company's Q3 earnings report.
- The agentic AI tool injected fresh excitement into the AI trade when it debuted last month.
- Now, Wall Street wants to know how Meta might turn Muse's popularity into cash flow.
Muse was a shot of life to the AI trade when it debuted last month, and now Wall Street wants to know how Meta plans to monetize that excitement.
Wall Street analysts are focused on the company's agentic AI as they head into the Q3 report, hoping for concrete details about how it can be monetized.
Earnings season hasn't been kind to Meta recently. The company has been punished for its lofty capex spending figures, often bearing the brunt of investor skepticism in times of high AI trade anxiety. But Muse might calm investors who have been nervous about such heavy spending, as it shows what some of that money has been going toward.
Meta is expected to post earnings per share of $5.60 to $6.58 and revenue of $63 billion for the quarter.
Here's what some of top analysts will be watching for in the report.
Bank of America
BofA analyst Justin Post noted in his Meta earnings preview that his team views Wall Street's revenue consensus as too low.
He noted that BofA thinks a more accurate reflection of investor expectations would be $64 billion in quarterly revenue, leading them to maintain a Buy rating on Meta stock and a bullish $810 price target.
"Recent AI launches have strengthened confidence in company's AI execution and we see Meta with least risk of AI disruption to core business in our coverage," he noted. "While 2027 EPS could see pressure on elevated AI investments, capacity assets are building, and we think Muse and Model traction can drive multiple expansion with stock at 22x 2027 EPS."
JPMorgan
Doug Anmuth of JPMorgan is bullish on Meta stock, maintaining an overweight rating and a $920 price target, noting that his team expects it to trade at roughly 26 times its GAAP earnings-per-share, estimated to be $35.45.
However, he added that they trimmed their Meta profit forecast due to a $10 billion legal cost tied to a Q3 settlement involving 52 state attorneys general on the impact of its apps on children. The analyst noted that this fee may not be factored into the company's guidance. As a result, JPMorgan has lowered its Meta earnings-per-share forecasts for 2026 and 2027 10% and 2% respectively.
Wells Fargo
Wells Fargo analyst Ken Gawrelski is highly bullish on Meta stock ahead of earnings, with a Buy rating and a $1,000 price target. The bank's upbeat thesis centers on Meta's AI rollouts, which Gawrelski and his team maintain will drive significant growth.
"Meta Muse Wonder reaches AI frontier, outperforming Fable and top models from OpenAI & Google, second only to Opus 5.5 on Artificial Analysis Intelligence Index," the analyst wrote. "Expect new models to bolster capabilities and use cases for Meta Muse, now at 2M+ DAUs."
Deutsche Bank
Deutsche Bank sees Muse helping Meta maintain its spot as a new AI leader, prompting its team to reiterate a Buy rating and a bullish $820 price target, along with a higher valuation multiple that implies it will trade at 27 times 2027 earnings.
"We think we are likely at the start of a rich product cycle that will foreshadow the potential returns to the significant infrastructure and R&D investment Meta has made from AI agents / Enterprise / Advertising," stated analyst Benjamin Black.
RBC Capital Markets
RBC's Brad Erickson has a lower Meta stock price target, currently at $770, but he maintains an Outperform rating.
"On META, in addition to ongoing industry-leading growth, we'd be looking for color around how business agent adoption is going thus far after the company began monetizing earlier in the quarter," Erickson noted.
He added that his team sees business agents like Muse as the company's top near-term monetization opportunity, outside of its core advertising business that has kept it competitive for years.
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