Quick overview
- Meta shares surged to nearly $780 due to strong adoption of Muse and positive sentiment from Meta Connect, but have since fallen to around $720.
- Concerns over rising competition from OpenAI’s rumored new agent and increased computing demands are impacting investor confidence in Meta’s growth sustainability.
- Despite Muse’s rapid user growth, Meta faces significant financial challenges, including high capital expenditures and legal costs, which could pressure future profitability.
- Investors are closely monitoring Meta’s ability to convert its substantial infrastructure investments into sustainable revenue growth amid ongoing regulatory scrutiny.
Meta stock soared toward $780 on Muse-driven optimism but have since fallen sharply toward $720 as OpenAI’s rumored new agent, rising computing demands and elevated spending revive concerns over the cost of sustaining growth.
Meta Stock Pulls Back Toward $720
Meta shares climbed toward $780 last Thursday as strong adoption of Muse and enthusiasm surrounding Meta Connect boosted investor sentiment. The stock reached an intraday high near its 52-week peak of $779.82 before reversing sharply.
Today, META is down about 4% toward $720, giving back much of last week’s advance as investors react to reports that OpenAI could unveil a new “o” agent at its September 29 DevDay keynote. The reported product could directly challenge the consumer momentum that has recently driven Meta’s rally.
OpenAI Threatens Muse Momentum
Muse has become a major catalyst for Meta shares since its September 8 launch. The consumer-focused personal assistant has reportedly generated more than 3.4 million downloads and reached approximately 700,000 daily active users, while briefly taking the top position in the U.S. App Store ahead of ChatGPT.
However, reports that OpenAI is developing a cloud-based agent capable of performing longer-horizon tasks, including handling email after users close the application, have introduced a fresh competitive concern.
The potential product could put additional pressure on Meta just as investors are becoming increasingly focused on whether Muse can maintain its rapid adoption.
Rapid Growth Creates Compute Pressure
Muse’s architecture reportedly relies on dedicated virtual machines, meaning CPU, memory and storage requirements can rise alongside user activity.
That creates an important financial challenge. Meta expects capital expenditure of approximately $125 billion to $145 billion in 2026, while market expectations have reportedly risen toward $197 billion in 2027 and $215 billion in 2028.
Strong user growth does not necessarily translate into immediate revenue. Oppenheimer has estimated around 340,000 U.S. downloads per day and noted that even an optimistic scenario of 500,000 daily downloads sustained for more than a year could produce only about 4% additional revenue in 2027.
Meta Connect Strengthens Growth Story
Meta Connect has provided another source of optimism through new hardware and technology initiatives, including Muse, upgraded smart glasses and virtual-reality products.
The strategy could eventually broaden Meta’s revenue base beyond advertising through hardware, subscriptions and digital content. However, the financial contribution from these businesses remains uncertain.
Investors will therefore be watching hardware shipments, subscription conversion and user engagement as Meta increases investment across its ecosystem.
Meta Stock Faces the Next Test
Meta’s move above $750 has strengthened the technical recovery and puts the stock firmly back in focus. However, the next phase will depend on whether the company can translate its enormous spending into sustainable revenue growth.
For now, $700 important psychological level has been overcome, while the $796 Wells Fargo target provides another reference point for investors. The rally has improved, but it didn’t reach new record highs and Meta’s rising capital requirements, legal expenses and regulatory challenges could continue to create pressure if growth fails to keep pace.
Meta Chart Weekly – September Hs Been Great for Meta Stock
Legal and Regulatory Costs Remain High
Meta also faces substantial legal expenses. The company has reached a framework to settle federal litigation concerning teen safety involving Facebook and Instagram. Meta has indicated that its legal charge could reach approximately $10 billion this quarter, although the company has denied wrongdoing and the proposed settlement remains subject to court approval.
Regulatory scrutiny also extends to its Ray-Ban Meta smart glasses, particularly privacy concerns surrounding their recording capabilities in Europe.
Spending Creates a Higher Hurdle
Meta’s enormous infrastructure spending remains the central risk alongside competition. Data centers, semiconductors, networking equipment and computing capacity require substantial capital before they can generate returns.
The September rally lifted META roughly 36%, but the subsequent decline toward $720 shows how quickly sentiment can change when investors question whether growth will justify the cost.
With Muse facing potential competition from OpenAI and its rapid adoption increasing computing requirements, Meta now needs to demonstrate that its expanding infrastructure investment can translate into sustainable revenue and cash-flow growth.
Meta Earnings Report
Meta reported Q2 2026 revenue of $60.8 billion (up 28% year-over-year), beating estimates, but posted an earnings per share (EPS) miss of $6.18 versus the expected $7.14. Surging expenses, legal/severance charges, and massive capital expenditures for AI infrastructure compressed margins and drove free cash flow down.
Key Financial Metrics
- Revenue: $60.80 billion, a 28% increase year-over-year.
- Earnings Per Share (EPS): $6.18 diluted, missing consensus forecasts.
- Net Income: $15.85 billion for the quarter.
- Total Costs and Expenses: $42.03 billion (including $2.4 billion in legal proceeding charges and $1.18 billion in severance).
- Capital Expenditures: $31.08 billion, driven by data centers and AI build-out.
- User Engagement: Family daily active people (DAP) averaged 3.60 billion for June 2026, a 3% increase year-over-year.
- Q3 2026 Revenue Guidance: Expected between $61 billion and $64 billion.
- Full-Year 2026 Expenses: Raised to a range of $165 billion to $169 billion.
- Capital Expenditures: Narrowed to a range of $130 billion to $145 billion for the full year.
- Next Earnings Date: Expected on or around October 28, 2026.
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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