Meta Stock Forecast: META Breaks $730 as Muse Reignites the AI Growth Story

TradingKey - Meta Platforms (META) finished up 11.34% at $741.25 on Monday, rising above the resistance at $730.79. The rise was driven by the rapid acceptance of Muse, Meta’s new AI, which has even placed it at the top of Apple’s U.S. App Store. With the latest development, the market is rejuvenated in believing that Meta will be able to monetize its large investments in AI. It is believed that Meta will be able to utilize its large investments in AI to enhance its existing advertising business. However, there are rising concerns that Meta will become excessively capital-intensive.

Muse Is Meta's Biggest Fresh AI Catalyst

MUSE is Meta's personal AI which is similar to ChatGPT. However, MUSE can assist in completing more complex tasks and can even make online purchases or book flights. Ultimately, Meta wants MUSE to be available and utilized across its ecosystem and the apps people use, including WhatsApp.

If utilized and accepted by the market, MUSE has the potential to revolutionize how Meta monetizes AI and develop a more robust business outside of advertising.

Meta One is a subscription service across Facebook, Instagram, and WhatsApp that offers 50 different features powered by artificial intelligence (AI) and other features for creators. According to Reuters, there were 15 million subscribers and trial users during the phased rollout.

Advertising Is Still the Core Earnings Engine

Total revenues for Q2 came in at $60.80 billion, a 28% increase from the prior year, with advertising revenues coming in at $59.36 billion, up 27% from last year.

Family daily active people came in at 3.60 billion, a 3% increase from last year, while ad impressions increased 14%. Average price per Ad came in at a 12% increase from last year.

AI will improve Meta’s recommendation systems and further augment Meta’s advertising and creative tools. This means Meta does not need to rely on Muse for the majority of its revenues to improve earnings.

Q3 Guidance Keeps Growth Expectations High

Inflating spending won’t dampen Meta’s projected profits this year. The company forecasted Q3 revenues of $61 to $64 billion, and projected full year operating income would be above 2025 levels. Meta is funding this growth despite a sharp increase in infrastructure spending.

Building AI infrastructure is expensive, and Meta’s major investment is larger than most because its advertising business is larger. AI will augment Meta’s advertising business.

CapEx Is the Biggest Fundamental Risk

Meta projects $130 to $145 billion in capital expenditures in 2026, primarily on AI infrastructure. Capital expenditures in Q2 2026 were $31.08 billion, including principal payments on finance leases. AI infrastructure is highly capital intensive. In the second quarter, operating cash flow was $31.9 billion, but free cash flow was only $784 million, mainly due to capital expenditures.

The level of cash spent on infrastructure was unexpectedly high considering the cash generated by the advertising business. Almost all of that cash was reinvested.

There are other areas of the business that need to produce cash at an increasing rate to support further cash reinvestment.

The Alberta Data Center Shows the Scale of the Buildout

Meta is in the process of building a C$13 billion (about $9 billion) data center in Alberta, and another data center in Utah. There have also been reports that Meta is building several data centers in Texas. Data centers can take a few years to construct. Based on some published projections, Meta is planning to build a data center in Alberta that would come online around 2029, while its independent power infrastructure is expected around 2030.

Meta’s AI infrastructure buildout is moving beyond GPUs, and for Meta this creates both a large financial and operational risk. Meta is placing large bets on executing data center projects; however, each of these projects is likely to increase Meta’s costs and attract even more public scrutiny on Meta’s use of data center energy.

Reality Labs and Legal Costs Remain Persistent Drags

Reality Labs, Meta's VR division, lost $4.62 billion in Q2 with revenue of only $431 million. Between the first half of 2026, Reality Labs amassed a loss of $8.65 billion.

In Q2, Meta recorded $2.4 billion in charges from lawsuits and approximately $1.18 billion from layoffs. Decreased lawsuits and layoffs would have increased Meta's bottom line.

A court in Germany found Meta to be liable for fraudulent advertising and additional risk for Meta in lawsuits.

Valuation Is Reasonable Only if Cash Flow Recovers

Meta's Q2 revenue grew 28% year over year, while the company expects full-year 2026 total expenses of $165 billion to $169 billion. This positive revenue growth significantly impacted Meta’s valuation.

At Monday's $741.25 close, Meta's market capitalization is about $1.9 trillion, with the stock trading near 25 times trailing earnings and about 21 times forward earnings.

Meta didn’t disclose when it would report Q3 earnings. When it does report earnings, I will be looking for revenue, ad pricing, Reality Labs losses, CapEx, free cash flow, Muse monetization and Meta One adoption.

Meta Technical Analysis: META Breaks $730.79 as Bulls Target $755.92

Currently, META's chart price is at $741.09, and the latest completed close is at $741.25. The 4 hour structure improved sharply after META broke through the levels at $686.08, $713.28 and $730.79.

I think the breakout candles above $730.79 are rather large. Additionally, the trend since September has been rather bullish, therefore an increasing probability of a bullish continuation.

Meta Stock Price Chart - Source: Tradingview

In the near-term, the price can be expected to rise towards $755.92. A break above $755.92 in the near-term is possible, however it raises the next price target to $784.85.

Alternatively, RSI is at 81. When this happens, the risk of a pullback or consolidation increases. Therefore, META can be expected to pull back to the $730.79 area in the near-term. If it breaks below $730.79, it can be expected to pull back to the $713.28 area. If the price pulls back to the $713.28 area, it is expected to be a consolidation, and a break below the $713.28 area would be bearish. If the price breaks below $713.28, the next expected support level is $686.08.

If META is trading below $730.79, $730.79 would become the first resistance, with $755.92 above it. A break above $755.92 would be expected to push the price to $784.85.

Why is Meta stock in focus now?

Investors can now see how Meta is using AI to develop new consumer products and areas of business that they can charge for. Also helping investors’ sentiments were better-than-expected earnings results for Q2, with revenues up 28%. Advertising revenues increased by 27% during the quarter. Meta One is Meta’s subscription service, which further helps expand Meta’s business.

What level confirms a stronger META breakout?

A close above $755.92 confirms a break of the next major resistance level, justifies the bullish view for the next target at $784.85, and maintains the bullish trend in the daily chart. A move below $713.28 would be bearish and invalidate the current bullish trend.

Bottom Line

Meta enjoys strong position with solid growth in advertising, new opportunities in consumer AI and subscription services.

The main risk is large, ongoing investments.Meta is projected to spend $130 - $145 billion this year on infrastructure. Free cash flow in 2nd quarter was only $784 million. META is bullish at the current price, but a close below $713 would probably lead to a test of $686.08. A close above $755 would increase the likelihood of a move to $784.