Why Meta Platforms Stock Was a Winner on Wednesday

Source The Motley Fool

Key Points

  • This is the social media company's agentic AI model.

  • It's been a popular app for users to download.

  • 10 stocks we like better than Meta Platforms ›

Meta Platforms (NASDAQ: META) stock continued to rise on Wednesday, and it largely has Muse to thank for this. Its just-released Muse artificial intelligence (AI) agent is a hot item with consumers, and is not only building a considerable user base but attracting companies to its ecosystem.

On Hump Day, several analysts weighed in with positive takes on Meta and Muse, which helped boost investor sentiment. Meta's shares closed the day up by 1%.

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Happy person using headphones and a phone while lying on a couch.

Image source: Getty Images.

The Muse effect

That morning, Stifel published a note that characterized AI agents as potentially significant catalysts for growth in the application services segment.

According to reports, the note's authors, led by J. Parker Lane, said that consumer AI agents like Muse offer a set of assistive services -- custom recommendations for shoppers and easier purchases, among others -- that can increase the number of transactions. That's a rising tide that can benefit many businesses involved in e-commerce.

Meanwhile, two analysts felt compelled to raise their price targets for Meta stock, citing Muse's potential as a key reason. Cantor Fitzgerald's Deepak Mathivanan lifted his to $860 per share from $680, and Justin Patterson from KeyBanc upped his to $900 from $780. Both pundits maintained the equivalent of buy recommendations on the shares.

Going Meta

Meta has clearly judged the market well here. Muse is far from the only commercially available AI model, but it's advanced enough to offer many capabilities not found in traditional, text-based chatbots.

It's also, importantly, a new revenue stream for Meta (as it's a part of its Meta One premium package), which will help the company reduce its dependence on advertising revenue. Those two Wednesday price target increases were rather assertive, but given Muse's potential, they look justified to me.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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