Meta's AI Muse Ignites Stock Comeback

Meta Platforms is experiencing a significant resurgence, with its stock jumping about 16% this week following the launch of its popular AI agent, Muse. Shares are now nearing their all-time closing high, signaling a strong market comeback. Analysts are optimistic, with one managing director at KeyBanc raising his price target to $900 and maintaining an Outperform rating, noting Meta's return to historical PE levels around 21x to 23x forward earnings.

This success follows a period of investor concern throughout 2026, marked by substantial AI investments and declining free cash flow. Meta also settled with 47 states regarding social media addiction claims in August. Earlier in the year, the stock saw drops after increased AI spending announcements and during the third quarter, with some analysts deeming results "barely passable."

Past challenges included criticism and over $73 billion in losses for its Metaverse initiative, Reality Labs. In February 2022, Meta experienced its worst day on record, with a 26% stock plunge after reporting its first-ever decline in daily active users and anticipating a $10 billion ad revenue hit from Apple's privacy changes. However, the company bottomed out in October 2022 and began its recovery.

Historically, CEO Mark Zuckerberg has utilized stock price lows as opportunities for cost-cutting and strategic pivots. This approach, coupled with a responsiveness to investor sentiment, appears to be a key factor in Meta's current impressive rebound.