JPMorgan upgrades Meta on AI models and agents, sees 'meaningful headroom'

Investing.com -- JPMorgan upgraded Meta Platforms to Overweight from Neutral in a note Thursday, saying the company's push into frontier artificial intelligence models and AI agents opens a new avenue for growth beyond advertising.

Analyst Doug Anmuth raised his price target for the stock to $820 from $640, citing Meta's early-stage rollout of AI-driven products, notably its Muse AI agent and Meta Model API access.

Meta shares are up about 20% from recent lows but roughly flat for the year, versus a 12% gain for the S&P 500.

Anmuth said Meta's superintelligence lab has essentially delivered on its goal of reaching the frontier within a year, with an accelerating cadence of model releases culminating in Muse Spark 1.3, which he said is competitive with Claude and GPT models.

He expects a coming model, dubbed Watermelon, to unlock further opportunities across consumer products, engagement, advertising and internal efficiency.

The Muse agent has seen strong early traction, reaching as high as No. 3 in the U.S. app store on its second day, the analyst said. While monetization is not a near-term priority, he pointed to potential from commissions and subscriptions in a market he sized in the tens of trillions of dollars.

Anmuth also flagged rising capital spending, projecting Meta capex of $243 billion in 2027 and $284 billion in 2028, both above consensus.

Even so, he said "there's still meaningful headroom in core advertising" from better targeting and AI content creation.

His new target is based on 23 times his 2028 earnings estimate of $35.44 a share, which he said "could prove conservative."

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