Meta's new AI agent could become a new revenue stream

Meta’s new AI agent Muse is giving investors another reason to get excited about the company’s AI ambitions. Since the app launched, the company has added more than $200 billion to its market value, as investors increasingly see Muse as a potential new source of subscription revenue.

Muse is meant to actually get things done

Muse launched on September 8 in the US and Canada, with versions available for both iOS and Android. With Muse, Meta is offering less of a traditional chatbot and more of a digital assistant that can take care of tasks from start to finish.

Users can ask the agent to draft an email, sell a car or handle a transaction, and it would take care of multiple steps along the way.

Meta’s basic version of Muse is free, which makes it easy for users to try the agent without paying a single dollar. The paid plans are at a $20 and $100 a month price point for users who could potentially need even more from the agent.

Bank of America Global Research told its clients that Muse users appeared happy with the agent’s ability to handle multi-step tasks and workflows without requiring constant intervention.

Muse is already getting attention from users

Muse recorded 2.8 million downloads during its first 12 days, according to Apptopia data cited by Reuters. During comparable early periods, Muse recorded 1.8 million downloads, compared with 1.3 million for OpenAI’s ChatGPT when the chatbot launched.

JPMorgan sees even more potential. “While it is still early, we believe that Muse has the potential to become the most widely used consumer AI application since ChatGPT,” the bank wrote.

The AI excitement spreads beyond Meta

The excitement around Muse has spilled over into Meta’s stock. Shares are up more than 20% since the agent launched, adding over $200 billion to the company’s market value and pushing the stock to its highest closing level in more than seven months. During that stretch, Meta has also outperformed the other members of the “Magnificent Seven” megacap group.

When Meta’s shares jumped over 11% on Monday, chipmakers also moved higher as investors bet that greater use of AI agents could translate into more demand for computing hardware.

AMD crossed the $1 trillion valuation mark for the first time, while Intel also saw gains.

Michael O’Rourke, chief market strategist at JonesTrading, said investors were viewing Muse as another potential source of demand for chips. He added that the market viewed Muse as a potential boost for the already heavily constrained CPU market.

The bigger question is how many users will pay

Downloads may be grabbing the attention, but what really matters for Meta is how many of those users end up paying for Muse.

Jefferies estimates Muse could generate about $10.8 billion in annualized revenue if it gets to one billion users by the end of 2027, with at least 3% of them subscribing to a paid plan. The firm has also raised its Meta price target to $875 based on this estimation.

Meta’s more than $200 billion increase in market value is far larger than Jefferies’ $10.8 billion annual revenue estimate, suggesting that investors are betting on more than just the subscription income.

The investors appear to be pricing in recurring cash flow and potentially a higher valuation as Meta develops into a consumer AI platform instead of remaining primarily an advertising business.

UBS Global Wealth Management stated that it sees the launch as an early sign that consumer AI agents could get through to a much wider audience, creating new ways for companies to monetize AI outside the enterprise market.

Wall Street is already quite bullish on Meta, with LSEG data showing that 57 of the 64 brokerages covering the company rate the stock at a “buy” or higher, and all working with a median price target of $760.

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