Meta’s Muse AI Downloads Are Soaring. Is It Time to Buy This Bargain AI Stock?

You might know Meta Platforms (NASDAQ:META) best for something many of us use every day, and that's social media. The company is a giant in the space as it owns Facebook, Messenger, Instagram, and WhatsApp. About 3.6 billion people worldwide use at least one of these apps every day. And these also drive Meta's revenue, as advertisers rush to advertise across these platforms, where they know they can find their target audience.

But Meta is also becoming a powerhouse in a second area: the industry of artificial intelligence (AI). The company has been investing billions of dollars into its own data centers and has built its own large language models to fuel its AI assistants. And this brings me to Muse, the company's new AI agent tool. Muse downloads have soared following its recent launch. Meanwhile, Meta shares continue to trade at very reasonable levels. Is it time to buy this bargain AI stock? Let's find out.

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Meta makes most of its revenue through advertising

So, first, let's consider Meta's general strategy and how AI fits into the picture. As mentioned, Meta generates the lion's share of its revenue through advertising. For example, in the recent quarter, the company brought in more than $59 billion in ad revenue on $60 billion in total revenue. This is a steady source of growth that Meta has been able to count on as it builds its position in the AI space.

Meta aims to create AI tools that will help users -- from individuals to businesses -- in a variety of ways, keeping us on the platform longer. This, in turn, should encourage advertisers not only to stick with Meta but also to potentially increase their ad spending. At the same time, Meta is using its AI strengths to improve the advertising experience and results for advertisers. And that too may encourage them to favor spending on Meta. At the same time, Meta aims to charge customers for certain AI tools and products, adding to its revenue streams.

Now, let's consider Meta's latest AI release. Muse, which launched on Sept. 8, surpassed OpenAI's ChatGPT as the top free iOS app in the U.S. on Sept. 18, according to CNBC. Muse had 730,000 downloads in its first five days and 2.5 million from its debut through Sept. 21, the news organization reported, citing Sensor Tower.

Meta's Muse Spark AI models fuel this AI agent, which has the ability to help individuals with everyday tasks such as filling out forms or turning a saved recipe reel on Instagram into a shopping list. Muse is free with a usage limit, but for greater usage, there is an option to sign up for a paid subscription.

It's important to consider Muse downloads and use over time

Does this initial Muse success mean it's time to pile into Meta stock? First, it's important to note that though the download volume is great news for Meta and its shareholders, this doesn't mean the product will continue to soar past rivals such as ChatGPT or Anthropic's Claude. Users may be interested in checking out this new AI agent, but might switch to another in the coming weeks or months. It will be important to watch whether today's momentum is sustainable.

That said, this one launch isn't the decisive event in Meta's AI story. Whether Muse is a huge success or not won't determine the company's overall AI success over time. Considering Meta's focus on and investment in AI, there's reason to be optimistic about the long-term picture. At the same time, Meta's successful social media business allows the company to invest in AI while maintaining growth. That's a point risk-averse investors will like.

As I mentioned earlier, Meta stock today is reasonably priced, trading at only 23x forward earnings estimates. This is higher than it was a few months ago, when valuation was significantly depressed, but it remains a bargain considering Meta's growth potential and well-established revenue stream.

So, the Muse download success isn't necessarily the reason to buy Meta stock -- it's the full picture that makes this tech giant a buy right now.

Adria Cimino 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.