JPMorgan Upgrades Meta to "Overweight" — Bank Sees New Growth Opportunity in AI Agents

JPMorgan upgraded Meta Platforms' stock rating from "Neutral" to "Overweight" and raised its price target from $640 to $820. According to the bank's assessment, the company's focus on advanced artificial intelligence models and AI agents is creating new growth opportunities that extend beyond Meta's advertising-dependent business.

JPMorgan analyst Doug Anmuth believes that Meta's Superintelligence Lab has essentially achieved its goal of reaching an advanced level of AI model development in approximately one year. According to him, the pace of model releases has accelerated, with the latest significant milestone being Muse Spark 1.3, which Anmuth assesses as competing with Claude and GPT models.

The analyst also anticipates the release of a new model called Watermelon. He predicts that this model could create additional capabilities in consumer products, user engagement, advertising, and improvements in the company's internal efficiency.

Meta's Muse AI agent has already shown strong results in its first days. The app climbed to third place in the US App Store rankings the day after its launch, while early usage rates were roughly 10 times higher compared to internal test groups.

According to Anmuth, monetizing Muse is not the company's main priority in the short term, though it could become a significant revenue source in the future. Potential monetization avenues under consideration include commissions and subscriptions, and the analyst estimates the potential market size for AI agents at tens of trillions of dollars.

At the same time, JPMorgan believes that the growth potential of Meta's core advertising business is far from exhausted. According to Anmuth's assessment, using AI to improve ad targeting, content creation, and recommendations will give the company additional room for growth.

The rapid development of the AI segment, however, is significantly increasing Meta's capital expenditures. Anmuth forecasts that the company's capital expenditures will reach $243 billion in 2027 and $284 billion in 2028 — both figures above market consensus.

JPMorgan's new price target is based on a 23x multiple of Meta's projected 2028 earnings per share of $35.44. According to Anmuth, this valuation could ultimately prove overly conservative if the company's new AI products begin generating revenue faster than expected.

Meta's shares have risen about 20% from their recent low, though they remain nearly flat compared to the start of the year, while the S&P 500 has gained roughly 12%. This gap reinforces JPMorgan's view that Meta's stock still has further room to grow.