Meta’s best month since 2013 has it on cusp of US$2 trillion level

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeInvestorMeta’s best month since 2013 has it on cusp of US$2 trillion levelFacebook's parent company still has a long way to go to proving it can make enough money from its AI efforts to justify the vast expenseAuthor of the article:Last updated 19 minutes ago In a sign of how impressed investors are with Muse, they’ve been dumping the shares of companies in a broad range of industries over fears about potential disruption. Photo by Minh Connors/BloombergMeta Platforms Inc. is finally seeing the stock breakout that beleaguered bulls had been banking on.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe Facebook parent’s shares have jumped 36 per cent in September following the release of its Muse personal AI assistant, which has risen quickly to the top of app charts and muffled concerns that heavy spending on AI won’t pay off. The stock is on pace for its best month since July 2013 and a roughly one per cent gain away from joining an elite group of companies worth at least US$2 trillion.This advertisement has not loaded yet, but your article continues below.“Muse clearly validates its AI strategy and position, after a year and a half where the stock was basically flat because people didn’t know if AI was going to be a net positive or a net negative,” said Rob Biederman, co-founder and managing partner at Asymmetric Capital Partners. “It’s logical that AI agents will become the front door to the internet for a lot of people, which puts the balance of power in Meta’s favour,” he added.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againMeta shares rose as much as 0.4 per cent in premarket trading Friday, putting them on track for their third consecutive session of gains.This month’s rally has marked a dramatic reversal for Meta, whose shares struggled for much of the year amid doubts about its costly AI efforts and legal risks stemming from lawsuits targeting its social-media business. Less than six weeks ago, Meta shares were down 18 per cent for the year in the wake of a disappointing revenue forecast in late July, putting the stock among the 50 worst-performers in the S&P 500 through Aug. 18.Since then, however, Meta is the third-best performer in the benchmark with a 43 per cent gain. The recovery began after Meta agreed late last month to pay as much as US$18 billion to settle a social-media lawsuit, removing a major overhang for the stock. But the biggest factor is excitement about new AI products and the potential revenue lift they could bring, which is giving investors like Biederman optimism that Meta shares have room to run.This advertisement has not loaded yet, but your article continues below.In a sign of how impressed investors are with Muse, they’ve been dumping the shares of companies in a broad range of industries over fears about potential disruption, similar to selloffs earlier this year sparked by AI startup Anthropic.Already, Meta has announced a grocery-selling partnership with Instacart-owner Maplebear Inc., as well as one with online travel agency Expedia Inc. At an event on Wednesday, Meta unveiled a number of products that analysts praised, including a palm-sized gadget for using Muse, as well as camera-free versions of its smart-glasses lineup.“There’s still meaningful upside potential as Meta is in the early stages of releasing frontier models and AI-driven products beyond advertising,” JPMorgan analyst Doug Anmuth wrote in a Sept. 10 note raising his rating on the stock to overweight from neutral.Of course, Meta still has a long way to go to proving it can make enough money from its AI efforts to justify the vast expense. Capital spending is expected to be nearly US$140 billion this year, double the roughly US$70 billion Meta spent in 2025. That figure is expected to swell to US$197 billion next year and US$215 billion in 2028.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.The heavy spending is taking a toll. After generating US$46 billion in free cash flow last year, Meta is expected to have negative free cash flow of US$6.4 billion in 2026, and negative US$29.2 billion next year.That’s putting pressure on the company to deliver growth. Sales are expected to rise 26 per cent to US$254 billion in 2026 while net income is expected to expand 33 per cent to US$80.6 billion, according to the average of analyst estimates compiled by Bloomberg. However, revenue and profit growth is expected to slow next year to 20 per cent and nine per cent, respectively.Meta is priced at 21 times profit expected over the next 12 months, according to data compiled by Bloomberg. While that’s up significantly from a June low of less than 14 times, it’s roughly the average multiple the stock has traded at over the past three years and a slight discount to the Nasdaq 100 at 22 times.“Right now Meta offers a below-market multiple for above-market growth, which is attractive on its own, but it also has massive scale and distribution, which are advantages that will be really hard for competitors to overwhelm,” Biederman said.This advertisement has not loaded yet, but your article continues below.Wall Street remains widely positive on Meta with more than 90 per cent of the analysts tracked by Bloomberg rating the stock a buy. But the shares are trading around the average price target, suggesting upside could be limited over the next 12 months.Given the extent of the rally, Meta shares are vulnerable to a pullback considering how fast perceptions can change in the market for AI services, according Brandon Pizzurro, who helps oversee US$29 billion in assets as chief investment officer at GuideStone Funds.“Sentiment on the big players seems to change as often as new AI models get released, and something like Muse gives markets the sugar rush of a new catalyst, but there’s an increasingly high bar to impress investors, and rightful trepidation on whether these companies can deliver,” Pizzurro said.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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