Analysts Split on Meta’s AI Timeline: Muse Downloads Surge While Revenue Delays Loom

TLDR

• Wells Fargo increased Meta’s price target from $796 to $1,000 while maintaining an Overweight rating.
• Analysts predict 2027 will mark an earnings low point as AI infrastructure costs surge ahead of major monetization in 2028.
• Citi maintained its Buy rating, highlighting Muse’s 6.6 million downloads in just 16 days as the top-ranked app.
• Meta shares advanced 0.2% to $743.01, reflecting a nearly 21% rally since Muse’s September 8 debut.
• Central Pacific Bank Trust Division increased its META holdings by 65% in the most recent quarter, valued at approximately $5.2 million.

Shares of Meta Platforms inched up 0.2% to $743.01 during Tuesday’s session, extending the stock’s rally to more than 20% since early September. The modest gain followed a pair of Wall Street analyst reports examining the social media giant’s artificial intelligence strategy.

Meta Platforms, Inc., META

Wells Fargo analyst Ken Gawrelski boosted his price objective to $1,000 from $796 while reaffirming his Overweight stance on the stock.

However, the update carried a cautionary message for near-term expectations. Gawrelski forecasts that 2027 will represent an earnings “trough” for Meta.

The reasoning centers on Muse, Meta’s latest AI assistant, which is unlikely to contribute meaningful revenue in the coming year. At the same time, spending on AI infrastructure continues to accelerate.

Gawrelski also flagged a $5 billion headwind from capacity resale losses. Meta is now retaining computing resources for its own AI initiatives rather than leasing them to external customers.

His recommendation to shareholders: focus on the longer horizon. Gawrelski anticipates 2028 will bring substantial AI-driven revenue layered onto Meta’s core advertising engine.

There’s an interesting twist. Gawrelski believes current Street estimates for 2027 remain overly optimistic. He expects downward revisions once analysts fully absorb the delayed monetization schedule.

Wells Fargo drew parallels between the Muse introduction and Meta’s 2022 Reels transition. That strategic shift redirected users from traditional posts to short-form video content and ultimately delivered positive results.

Citi Highlights Strong Early Adoption

Citi analyst Ronald Josey took a more immediately positive view in his Tuesday note. He confirmed his Buy rating and maintained an $800 price objective.

Josey emphasized that Muse has already accumulated more than 6.6 million downloads. The app has held the top position in download rankings for 16 consecutive days.

Citi projects Muse could eventually deliver upward of $27 billion in annual revenue once fully scaled. That forecast represents a significant potential revenue stream for the platform.

Market reaction to both bullish notes was muted. The stock registered minimal movement in response.

Institutional Ownership Continues Expanding

Beyond Wall Street research, institutional capital continues flowing into Meta. Central Pacific Bank Trust Division expanded its META position by 65% during the last reporting period.

The institution acquired an additional 2,817 shares, raising its total holdings to 7,169 shares valued at roughly $5.2 million. Other smaller investment firms, including Watchman Group and Penney Financial, similarly increased their allocations.

Institutional investors and hedge funds collectively control nearly 80% of Meta’s outstanding shares. This represents a substantial concentration of professional investment capital.

According to MarketBeat data, the average analyst price target for Meta stands at $787.86. Individual targets span from a low of $700 to a high of $900.

Company insiders have been sellers rather than buyers recently. COO Javier Olivan and CEO Mark Zuckerberg both executed share sales in September through predetermined trading programs.

Over the past three months, insiders have sold approximately $99.9 million worth of stock. Insider ownership currently represents about 13.5% of the company.

Meta’s most recent quarterly results, released July 29, delivered revenue of $60.80 billion. This surpassed analyst estimates of $60.22 billion and represented 28% year-over-year expansion.

Earnings per share reached $6.18, falling short of the $7.19 consensus forecast. Meta distributes a quarterly dividend of $0.525 per share, translating to roughly a 0.3% yield.

Tuesday’s opening price was $741.90, approaching the 12-month peak of $779.82.