Meta Platforms (META) stock is pulling back a little, but Wall Street keeps raising its price targets. The stock is up about 36% from its July lows and sits only 6% below its highs. Investor sentiment has improved a lot.
Why sentiment turned
Much of the shift comes from Meta (META) acting more like Apple (AAPL) at its peak than Apple does now, in terms of new ideas, consumer products, and how its technology works. The buzz around Meta's AI products - Muse and the Muse Wonder - all feeds its main money engine, advertising.
Advertiser interest in Meta (META) leads every competitor and is speeding up. Measured by advertiser visits, Meta ads rank first, up 61% year-over-year. That is fast growth, and Meta holds the top share of recognition among all its rivals. Back in February, that growth was only about 4% year-over-year. Meta uses its AI to help advertisers build better campaigns, and it is gaining ground. Advertising makes up about 98% of the company's revenue.
With earnings about a week away, this reads as a strong signal: Meta is both releasing new products and turning those wins into advertising money.
The 3.6 billion user base and paid AI
Meta (META) has about 3.6 billion daily active users across its platforms. It wants to spread out its revenue sources, since most profit now comes from advertising. It has started charging for the Meta Muse platform, which looks popular based on downloads and daily active users.
Will people actually pay for these AI agents? There is real doubt. Charging for agents could turn into a race to the bottom, especially against Claude from Anthropic, OpenAI, and Grok from Tesla (TSLA) or SpaceX. You can start charging, but keeping it up is the hard part.
Meta's (META) edge that rivals lack is the base of 3.6 billion daily active users it can pull in. Right now the people paying for AI agents are mostly AI "super users," not average citizens. That could change if users see benefits inside their own Facebook or Instagram after integration. Someone who buys glasses with a Muse agent built in might see it as an easy upgrade and decide to pay to solve their questions. That gives non-experts a first taste of AI. Meta sits in the best spot - better than anyone except maybe Apple (AAPL) - to open those doors for everyday users.
Advertising is 98% of revenue, but Meta is building business agents and other areas to earn from subscriptions. Even small success there is a big opportunity given the huge user base.
Strength that is also a risk
Heavy reliance on advertising is both Meta's (META) strength and a possible weak spot, a risk area.
UBS and Goldman Sachs (GS) disagree. Both are positive on Meta (META), but Goldman is more cautious. UBS sees a possible new revenue source from AI - its advertising channel audits - where AI-based automation helps drive extra ad spending. UBS raised its price target on Meta (META) to 884. Goldman lowered its price target but keeps a "buy" rating. Goldman says advertising strength supports the growth story, but rising expenses are a concern and could limit some growth and hurt net income.
What the sentiment data shows
Spending is what pulled the stock down a bit last quarter after the company reported. But ad interest shows no sign of slowing. The data agrees more with the UBS view. Ad interest is speeding up, and overall sentiment among people actually using the product is improving.
Usually when demand picks up, sentiment weakens a little because higher usage and volume lead to a leveling off or decline. That is not happening here. Meta (META) has built a strong personalized advertising product that is easy to use and very flexible for reaching a target audience.
The 61% year-over-year growth is a clear speed-up even versus last quarter. Last quarter, advertising revenue grew about 27% year-over-year. There is no exact one-to-one match between tracked growth and reported revenue, but the acceleration points to advertising revenue growing more than last quarter.
The catch: the bar is now higher. Investor sentiment has risen about 20 points, so it will be harder for Meta (META) to beat expectations this reporting period. Still, its main revenue source, advertising, is speeding up, and the product lineup points consumers in the right direction long term.
The response to Meta's (META) Ray-Ban glasses compared to the home kit Apple (AAPL) introduced the day before is like heaven and earth in the data. That is worth watching heading into the holiday shopping season - which products become gifts and which become a first step into the ecosystem. More people are entering the Meta ecosystem through different paths.
