Meta May Be an AI Winner After All: Morgan Stanley

Mark Zuckerberg is having just about as tough a year as a centibillionaire can have. Shares of Meta are roughly flat year-to-date, lagging the broader market. The company just agreed to a landmark settlement with state attorneys general that could reshape it forever. And, worst of all, there’s yet another Aaron Sorkin-penned movie on the way.

But there may yet be light at the end of the tunnel.

Last week, Morgan Stanley analyst Brian Nowak wrote in a note to clients that the company could win a sizable piece of the $30 trillion consumer AI pie, and said the company’s share price may gain 25% by New Year’s Eve. It’s a welcome endorsement for a company that long considered an AI also-ran.

Meta’s massive capex allocations belie the fact that it has all but forfeited the AI frontier to leading labs such as OpenAI and Anthropic. But Wall Street still sees plenty of value in an AI that’s less focused on disproving mathematical impossibilities and more focused on the everyday tasks of regular folks. And by that, of course, they mostly mean shopping. In the suddenly all-important race to build a consumer AI agent, Meta’s existing family of apps and gargantuan user base give it a critical edge to “create a more personalized agent with new monetizable behaviors,” Nowak wrote. “The entry price of the product … free … is also a notable advantage that comes with scale.”

It seems Zuckerberg has finally found his muse. Not so coincidentally, Meta last week launched Muse, its consumer AI agent:

Not so Super: Muse is part of Zuckerberg’s goal to deliver “personal superintelligence” to Meta’s billions of users. Internally, some Meta employees see Muse as a bit of a dunce, according to a recent Reuters report. One employee flagged it as unreliable when tasked with monitoring for concert tickets, while others flagged much more serious security flaws. Meanwhile, not everyone on the rest of the internet is ready to welcome agents with open arms. Online restaurant booking service Resy, for instance, is banning users who hand their account over to AI agents. Let’s just describe their position on the matter as one of deep resyvation.