Meta (META) Stock Drops 3% Amid AI Sector Turbulence and Muse Concerns

Key Highlights

• Meta Platforms experienced premarket losses on Monday, threatening consecutive declines for the first time since mid-August.
• Despite recent volatility and Friday’s 3% retreat, the stock has surged 32% throughout September.
• Broader AI sector weakness emerged after OpenAI announced a pause in training its latest artificial intelligence models.
• Wall Street maintains an optimistic outlook, with analyst price targets spanning $855 to $950 driven by Muse’s traction.
• According to Jefferies, users are assigning Muse increasingly sophisticated responsibilities, marking it as an unexpected success story.

Meta stock continued its downward trajectory Monday morning, declining approximately 3% during premarket hours. This followed Friday’s 3% decrease, marking the potential for consecutive daily losses—a pattern not seen since the middle of August.

Meta Platforms, Inc., META

Despite this recent volatility, September has delivered exceptional returns for Meta shareholders. Through Friday’s trading session, the stock has posted a remarkable 32% monthly gain.

The bulk of this impressive performance can be attributed to Muse, Meta’s newly launched personal AI assistant. Since its September 8 debut, the application has soared to dominant positions across major app store rankings.

However, the initial enthusiasm appears to be moderating. This shift leaves investors questioning the stock’s near-term trajectory.

Understanding the Recent Weakness

A portion of the selling pressure originates from developments beyond Meta‘s direct control. OpenAI recently disclosed it has suspended training activities on its most advanced models, with plans to restart only after implementing enhanced safety protocols.

This announcement has created headwinds across AI-focused equities, with Meta feeling the impact. According to BNP Paribas analyst Nick Jones, competitive dynamics now represent the critical narrative for market participants.

“Going forward, we believe investors should monitor anticipated rollouts of rival consumer AI agents, especially from major platforms such as Google and OpenAI,” Jones stated in a research note published late Friday.

Despite these concerns, Jones maintains an optimistic rating with an $855 price objective, suggesting 14% appreciation potential from Friday’s closing level.

Muse’s Revenue Outlook

Presently, Muse generates revenue through modest transaction charges. Jones emphasizes that sustainable long-term monetization remains a critical uncertainty for the investment community.

He identifies advertising integration as a viable opportunity down the road, despite Meta’s current strategy of keeping Muse advertisement-free.

Jefferies takes a more constructive stance. Following its AI Summit, the firm reaffirmed its Buy recommendation and $875 price objective, characterizing Muse as an unexpectedly successful product launch.

Meta shares closed at $751.66, sitting just 1% beneath their 52-week peak of $779.82.

Jefferies highlighted that Muse engagement continues expanding as users deploy the platform for increasingly sophisticated applications. The firm expressed surprise at the level of trust users have placed in Muse within weeks of launch, with use cases ranging from municipal fine payments to creating comprehensive tracking systems.

Trading at 19 times projected fiscal 2028 earnings, Jefferies believes the valuation supports further appreciation. While acknowledging emerging competition from Alphabet and Apple, the firm hasn’t adjusted its constructive stance.

Additional analysts have issued upward price revisions. Canaccord elevated its target to $950, highlighting Muse’s impressive 2.5 million downloads during its initial two-week period.

TD Cowen increased its objective to $865, citing improved visibility into AI revenue generation following Meta’s Connect conference. The event showcased updates on virtual reality technology and AI Audio Glasses.

Piper Sandler similarly lifted its target to $875, responding to CEO Mark Zuckerberg’s AI strategy discussion at Connect 2026. However, universal enthusiasm remains elusive.

Oppenheimer maintained its Perform rating, expressing reservations about Muse’s monetization framework and 2027 operational expenditure projections. The firm observed that Muse continues attracting approximately 340,000 daily U.S. downloads.

BMO Capital also adopted a measured approach with a Market Perform rating and $580 price target. BMO referenced Meta’s upcoming VR glasses, carrying a $1,299 price tag with a planned spring 2027 release.