Meta rallied 27% in September. Could Muse become its next revenue engine?

• Meta shares rallied 27% in September as investors responded positively to the rapid adoption of Muse, its new AI agent. 

• Muse could be monetised through transaction fees, subscriptions and incremental advertising revenue, creating new revenue opportunities beyond advertising. 

• Competition, retailer resistance, privacy and cybersecurity remain key risks to Muse’s longer-term adoption and monetisation. 

• Meta is broadening its AI monetisation strategy through its enterprise platform and AI-enabled wearables.

• We maintain our target price of USD 1,018 as Muse’s monetisation remains at an early stage. We would like to see greater evidence of revenue growth before reassessing our valuation, with our target price implying 40.5% upside from Meta’s closing price on 30 September.

Meta’s shares rallied strongly in September, gaining 27% as investors responded positively to the early traction of its new AI agent, Muse. Since its 8 September launch, Muse has accumulated more than 3.4 million downloads and reached the No. 1 position among free apps on both Apple’s App Store and Google Play in the US, surpassing ChatGPT. In its first 12 days, Muse also outpaced ChatGPT in adoption, recording 1.8 million iOS downloads in the US and Canada, compared with 1.3 million for ChatGPT over the same period, according to Apptopia.

Muse is designed to do more than answer questions. It can act on a user’s behalf, from sending emails and booking travel to filling out forms and shopping across websites and marketplaces. It is currently available only in the US and Canada, with both a free tier and paid subscriptions of USD 20 and USD 100 a month for heavier use.

While AI agents are not new, Muse’s appeal lies in making agentic AI more accessible to mainstream consumers. Earlier agents such as OpenClaw have generally required technical know-how to set up and use effectively, with adoption concentrated largely among technology enthusiasts and professional users. Muse instead hides much of the underlying complexity behind a simple, consumer-friendly interface, lowering the barrier to entry.

Meta is also moving quickly to expand Muse beyond individual consumers. On 29 September, it introduced Muse for Small Business, allowing businesses to connect tools including Shopify, QuickBooks, Stripe and Canva and use Muse to help with tasks ranging from managing operations and finances to finding new customers.

Muse offers Meta a new path to AI monetisation

The launch of Muse comes at a time when investors are questioning Meta’s ability to monetise its heavy AI spending. The company’s latest 2026 capex guidance stands at USD 130-145 billion, while free cash flow has declined sharply to USD 784 million in 2Q26 from USD 8.55 billion a year earlier.

Meta’s financial results highlight just how dependent the company remains on advertising. In the second quarter of 2026, advertising generated USD 59.4 billion of revenue, compared with USD 1.0 billion of other Family of Apps revenue and USD 431 million from Reality Labs. In other words, advertising accounted for roughly 98% of Meta’s total quarterly revenue. Muse offers a new, potentially substantial source of revenue beyond its core advertising business.

Figure 1: Advertising makes up the bulk of Meta’s revenue

Muse could eventually be monetised through three main avenues: transaction fees, subscriptions and advertising.

Firstly, transaction fees could become the main monetisation model. When Muse shops and completes a purchase on a user’s behalf, Meta plans to earn a small referral fee or share of the transaction value. Muse has already begun integrating with retailers and payment providers, including Walmart, Best Buy, Sephora, Wayfair, Shopify, PayPal, Instacart and Expedia.

Secondly, Meta can monetise heavier users through subscriptions with paid tiers at USD 20 and USD 100 a month. While most users are expected to remain on the free tier, subscriptions could still provide a more predictable source of recurring revenue among businesses and high-frequency users.

Thirdly, Muse could indirectly support Meta’s existing advertising business. Meta says conversations and data stored within Muse’s virtual machine are not shared with its advertising systems. However, the company notes that Muse’s activity on the wider internet can indirectly affect the ads a user sees. For example, if Muse visits a clothing retailer’s website to purchase a shirt, that visit could allow the retailer to subsequently show the user an Instagram ad. This could create incremental growth in advertising revenue.

Key considerations as Muse scales

Despite the promising start, there are several risks to Muse’s longer-term adoption and monetisation.

Competition is likely to intensify. AI agents are attracting increasing attention from large technology companies and startups. OpenAI just unveiled Dots on 29 September, its own personal AI agents designed to perform personal and professional tasks, while startups such as Instinct are also attracting significant funding and attention. Meta’s advantage is its ability to distribute Muse across its large existing ecosystem and make the technology accessible to mainstream users.

Retailer resistance could also constrain Muse’s transaction-based model. Amazon has blocked Muse from its retail site, arguing that Muse bypasses the personalisation features built into its shopping experience, and raised concerns over Muse’s access to customer credentials. Other retailers could take a similar approach if they are concerned about losing direct relationships with customers or having to share transaction economics with Meta. That said, Meta has already secured a growing network of retail and service integrations through its Connector Platform, spanning e-commerce, grocery, productivity and travel, which should support broader adoption of agentic shopping. If agentic shopping gains sufficient consumer traction, retailers may also have greater incentive to participate rather than risk being excluded from an emerging distribution channel.

Privacy concerns are another important hurdle to overcome. Muse may require access to sensitive information and third-party apps and services, such as personal emails and bank accounts, to unlock its full functionality. This could make some users uncomfortable with granting Muse access to such data. Meta says users control which applications Muse can access and can opt out of having their interactions used to train its AI models. The company also plans to introduce Muse Confidential VM later this year, which is designed to encrypt the virtual machine so that Meta cannot access the data stored within it.

Cybersecurity is also a key concern. While Meta has said that each Muse agent runs in an isolated environment, does not see users’ actual passwords or payment details, and requires user approval before carrying out sensitive actions, there is still a risk that compromising a single agent could provide access to multiple services that would otherwise be protected by separate logins.

These are issues Meta will need to address as it scales Muse and seeks to build it into a meaningful new revenue stream.

Meta’s AI monetisation opportunities extend beyond Muse

On 29 September, Meta launched the Meta Enterprise Platform, which will bring its AI models, agents, coding tools and APIs to businesses and developers. Meta has appointed Chirantan “CJ” Desai, the former CEO of MongoDB, to lead the new business. Desai said the company’s goal is to “make Meta the place enterprises come to scale their businesses”. Meta has yet to disclose pricing or a specific revenue model, but the initiative could create a new recurring revenue stream while broadening its commercial footprint.

Wearables provide another potential avenue for AI monetisation. Meta is increasingly positioning its smart glasses as a platform for accessing AI, with Muse eventually available through its AI glasses. At Meta Connect 2026, the company unveiled the Ray-Ban Meta Audio, its first pair of smart glasses without cameras, addressing privacy concerns over people potentially being recorded without their knowledge or consent. It also introduced the Muse Charm, a handheld device that allows users to interact with AI agents through voice. In addition, Meta unveiled a new lightweight VR headset designed to be more comfortable for extended use, while being lighter and cheaper than Apple’s Vision Pro. Together, these products could strengthen the role of AI across Meta’s hardware ecosystem and create additional opportunities to monetise AI through device sales.

Maintain target price as monetisation remains early

The pace of Meta’s AI development is encouraging. Once viewed as a laggard in frontier AI, Meta has made significant improvements in the capabilities of its AI models over the past few months, while also expanding its AI ecosystem through Muse, Meta Enterprise Platform and its growing range of AI-enabled wearables. The stock’s recent re-rating suggests investors are increasingly recognising the potential for Meta to monetise its AI investments. However, we would like to see greater evidence that this potential is translating into meaningful revenue growth before revising our target price.

In the upcoming third- and fourth-quarter results, we will be watching engagement metrics such as daily active users, early monetisation signals such as transaction volumes facilitated by Muse, any contribution from Muse to the core advertising business and continued growth in wearables. Downloads demonstrate initial consumer interest, but retention and monetisation will be more important in determining whether Muse can become a meaningful business.

At this stage, Muse’s revenue is likely to remain immaterial relative to the scale of Meta’s AI investment, and we expect the company to report negative free cash flow in 2026 and 2027 as it continues to invest heavily in AI infrastructure. Nonetheless, the rapid adoption of Muse provides an early indication that Meta has the potential to build new revenue streams around its AI investments.

We maintain our target price of USD 1,018 for Meta, implying upside potential of 40.5% from its closing price on 30 September.

Table 1: Projections for Meta’s earnings

Meta Platforms	2025	2026E	2027E	2028E
Earnings Per Share (EPS)	29.33	32.66	36.48	44.29
Earnings Growth YoY	22.3%	11.4%	11.7%	21.4%
PE Ratio (X)	22.5	22.2	19.9	16.4
Target Price (based on a fair PE of 23X)				1018
Upside Potential				40.5%
Source: Bloomberg Finance L.P., iFAST Compilations. Data as of 30 September 2026

Figure 2: Share prices are driven by earnings growth in the long run

Declaration:

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a NIL position in the abovementioned securities. The analyst who produced this report holds a position in Meta Platforms.