Meta’s (META) stock still looks cheap, even after its Muse Spark moment this week.
“Even with the recent mini-rally, Meta shares are dislocated, trading at an 18x price-to-earnings ratio (within ~10% of its trailing 3-year trough multiple) on concerns regarding the company’s aggressive 2026 capital expenditure plans as well as recent legal/regulatory developments. In our view, Meta is fully capable of addressing both issues,” said Evercore analyst Mark Mahaney in a Friday note.
Mahaney mainted his Outperform rating on Meta and $900 price target. The price target — towards the high end of Wall Street estimates per Yahoo Finance data — assumes 43% upside from current levels.
Mahaney added that “Meta’s recent release of Muse Spark, its first model released since the formation of Superintelligence Labs, demonstrates the company’s ability to translate elevated AI spend into a tangible frontier model that could not only improve/enhance the core advertising engine but also unlock additional monetization opportunities across Meta AI, WhatsApp Business Messaging, etc.”
All in all, Meta is having a good week.
Its stock rose 6.5% to $612.42 on Wednesday following the unveiling of its new Muse Spark flagship model from its new Meta Superintelligence Labs. The stock tacked on another 2.6% in Thursday’s session.
Shares were higher in Friday’s pre-market trading. The company’s market cap has gained about $143 billion in the past five trading sessions.
Muse Spark, aimed at better competing with OpenAI’s (OPAI.PVT) ChatGPT and Anthropic’s (ANTH.PVT) Claude, is a native multimodal reasoning model that processes text and images simultaneously.
It currently powers the Meta AI app and website, and the company plans to roll it out across WhatsApp, Instagram, Facebook, and AI glasses in the coming weeks.
CEO Mark Zuckerberg described the model as “the first step on our scaling ladder” and the result of a “ground-up overhaul” of the company’s AI stack. The model is designed to move beyond simple chatbots toward AI agents that don’t just answer questions but “do things for you”.
Others on Wall Street besides Mahaney praised the release. To this group, it was positive to see a strong new tech release from Zuckerberg’s lavish spending on AI experts over the past year.
“The launch of Muse Spark should provide increased confidence in Meta’s scaling trajectory and improve investor sentiment,” J.P. Morgan analyst Doug Anmuth said in a note.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.