Meta Platforms shares reversed course, falling as much as 3.7% after surging on optimism around its new Muse AI agent. Goldman Sachs tempered the rally by flagging how much annual revenue hyperscalers need to justify their AI spending, while several banks reaffirmed cautious Hold ratings on the stock.
Meta Platforms stock fell 3.7% in mid-day trading on Thursday, giving back much of the previous day's rally after Goldman Sachs struck a less optimistic tone on the company's artificial intelligence spending. The stock had gained 4.5% yesterday as analysts cheered the early success of Meta's new "Muse" AI agent.
Why Goldman Sachs is cautious
Goldman estimates that AI hyperscalers, including Meta, will spend $800 billion on capital investment this year and $1.1 trillion next year on chips and data centers. Hyperscalers have announced revenue backlogs above $1.5 trillion, but Goldman says the group needs consistent AI services revenue of around $300 billion a year just to break even on that spending, and closer to $1 trillion a year to earn a decent profit.
According to Goldman Sachs: "The impact of AI on corporate earnings should become increasingly visible in coming quarters."
Muse app's rapid rise fueled the rally
The reversal followed a sharp run-up. Meta's Muse personal AI agent reached 2.8 million downloads within two weeks of its September 9 launch, topping the Apple App Store and Google Play charts in the United States and Canada. That momentum had pushed the stock up roughly 16% over the course of the week before today's pullback.
Yet not every signal has been positive for Muse. Amazon earlier banned the AI agent from making purchases on its e-commerce platform, a restriction that continues to raise questions about the tool's monetization potential.
Wedbush and BMO stay cautious
Wedbush and BMO Capital both reaffirmed Hold ratings on Meta this morning, reinforcing a cautious stance even as other analysts stayed bullish on Muse. KeyBanc's Justin Patterson raised his price target to $900, while Tigress Financial lifted its target to $995.
The S&P 500 and Nasdaq traded essentially flat on the day, meaning Meta's decline came from company-specific dynamics rather than broader market pressure. The stock had entered the session near its 52-week high of $779.82, reached the prior session, leaving it prone to a pullback after such a rapid climb. Meta still carries a market cap of $2.0 trillion, according to Fool. Investing.com puts the stock well above its 52-week low of $520.26 set earlier in the year.
Sources: Motley Fool, Investing.com
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