JPMorgan Turns Bullish on Meta. Muse AI Agent Fuels 30% Upside Call For Its Stock.

JPMorgan is turning more bullish on Meta Platforms, betting that the tech giant's aggressive expansion into artificial intelligence could open new businesses beyond its massive advertising operation, even as the spending required to compete in AI threatens to put unprecedented pressure on cash flow.

The bank upgraded Meta to "buy" from "neutral" in a Thursday note and raised its price target to $820, according to CNBC. The new target implies roughly 30% upside from Meta's Wednesday closing price. The upgrade follows a burst of AI product announcements from Meta, including the Tuesday launch of its Muse personal AI agent app, powered by the company's Muse Spark family of models.

Meta also released the latest version of the underlying model last week, moves JPMorgan analyst Doug Anmuth views as the beginning of a much broader AI product strategy. "We believe there's still meaningful upside potential as Meta is in the early stages of releasing frontier models and AI-driven products beyond advertising, notably Muse AI agent and Meta Model API access," Anmuth wrote in the note, according to CNBC.

Early consumer response to Muse appears to have caught JPMorgan's attention. Anmuth said the app climbed as high as No. 3 in the U.S. App Store on its second day, while early usage was running at 10 times the level recorded among Meta's training cohorts.

Muse is designed to function as a personal AI agent capable of carrying out tasks for users rather than simply answering questions. That places Meta more directly in the increasingly competitive market for agentic AI, where technology companies are developing systems that can independently perform multi-step digital tasks.

Meta is not prioritizing monetization of Muse yet, according to Anmuth, although the app already offers both free and paid subscription tiers. JPMorgan sees an enormous longer-term opportunity if AI agents become a major layer of the digital economy. Anmuth estimated the potential total addressable market could eventually reach into the tens of trillions of dollars. That opportunity, however, comes with an enormous bill.

The more successful Meta's AI products become, the more computing power the company will need to train models, run inference, and serve potentially hundreds of millions of users. JPMorgan now expects that infrastructure race to put significantly greater pressure on Meta's finances.

Anmuth forecasts Meta's free cash flow could fall to negative $65 billion to $75 billion annually in both 2027 and 2028 as the company pours money into AI infrastructure and computing capacity. However, JPMorgan's forecast does not include potential revenue generated by Meta's emerging AI products. If Muse, API access, or other AI services begin generating significant sales, the financial picture could look considerably different.

Meta also does not need entirely new AI businesses for the technology to contribute to its bottom line. The company's core advertising empire, built around Facebook and Instagram, could continue benefiting as AI improves recommendations, keeps users engaged longer, and makes advertising systems more efficient.

"And importantly, we believe there's still meaningful headroom in core advertising from AI-driven improvements tied to content recommendations and engagement, better ad targeting and retrieval, and AI content creation," Anmuth wrote.