Key Highlights

● META shares rose 3.38% to $742.96 in Monday’s session, after touching an intraday high of $752.24, on volume 1.5 times the usual pace.

● Meta released Muse Wonder and Muse Wonder Full on October 12, which it called its most capable models to date.

● Second-quarter revenue rose 28% to $60.8 billion, but diluted EPS fell 13% to $6.18 and operating margin narrowed to 31%.

● Meta guided third-quarter revenue to $61 billion to $64 billion and narrowed 2026 capital expenditure guidance to $130 billion to $145 billion.

What pushed Meta Platforms (NASDAQ:META) to the second spot on the list of most active US stocks on Monday was a product launch. On October 12 the company released Muse Wonder and Muse Wonder Full, which it called “our most capable models to date.” Investors responded by buying. The stock closed at $742.96, up 3.38% from Friday’s close of $718.67, after reaching an intraday high of $752.24. In all, 24.83 million shares traded, 1.5 times the usual pace, for roughly $18.44 billion in dollar volume. Among US stocks that day, only one name traded more by value.

The shares rose as much as 4.7% after the announcement. Meta outperformed the wider tech group. The Software & IT Services sector gained about 1.06% on the day, with Microsoft (NASDAQ:MSFT) up 0.81%. That points to a stock-specific move rather than a sector-wide one. Returning institutional demand also helped, and traders were positioning ahead of third-quarter results.

The Muse Wonder Launch

Meta’s newsroom said Muse Wonder is available now to developers through the Meta Model API and Muse Code. Muse Wonder Full is open to Muse Code subscribers. The models will soon power Meta’s Muse assistant app, with subscribers getting access first. Meta claims “state-of-the-art performance on personal and professional agentic tasks,” including expert work in law, finance and health, and coding. It also highlighted features called Active Memory and Active Focus. The announcement gave no benchmark figures, and Meta said a fuller safety evaluation report would come “soon.” The claim of parity with OpenAI’s ChatGPT and Anthropic’s Claude came from Meta and was not backed by cited benchmarks.

The launch marks a strategic change. Unlike the open-source Llama releases of earlier years, Muse Wonder is a closed model. Meta plans to earn money from it through API access and tiered subscriptions. Alexandr Wang, Meta’s AI chief, said, “These are true frontier models.” The release follows a 14-month overhaul of Meta’s AI organization. It also comes after a May reduction of about 10% of the workforce, roughly 8,000 jobs.

Monday’s gain extended a strong run. Meta launched the Muse personal agent app on September 8. The shares have risen about 22% since then. Wells Fargo (NYSE:WFC) analyst Ken Gawrelski raised his price target to $1,000 from $796 on October 6 and kept an Overweight rating. He pointed to enthusiasm around Meta’s product cycle while warning that heavier infrastructure spending would weigh on near-term earnings.

What the Company Does

Meta runs Facebook, Instagram, WhatsApp and Messenger. Together they averaged 3.60 billion daily active people in June, up 3% from a year earlier, according to the company’s second-quarter figures. Almost all of Meta’s revenue comes from advertising. Of $60.8 billion in second-quarter sales, $59.4 billion came from ads. The company also runs Reality Labs, its virtual and augmented reality hardware unit. In the second quarter Reality Labs posted $431 million in revenue and an operating loss of $4.62 billion. Meta pays a quarterly dividend of $0.525 a share, a yield of about 0.3%.

Latest Results and Guidance

Meta reported second-quarter results on July 29. Revenue rose 28% from a year earlier to $60.8 billion, ahead of consensus near $60.2 billion. Ad impressions grew 14% and the average price per ad rose 12%. Profit fell short, however. Diluted earnings per share dropped 13% to $6.18, against estimates of about $7.19. Operating margin narrowed to 31% from 43%. Total costs and expenses jumped 55% to $42 billion, which included $2.4 billion in legal charges and $1.18 billion in severance. Quarterly capital spending reached $31.08 billion, close to double the year-earlier level. Free cash flow shrank to $784 million from $8.55 billion.

For the third quarter, Meta guided revenue to $61 billion to $64 billion, slightly below consensus at the midpoint. It narrowed full-year 2026 capital expenditure guidance to $130 billion to $145 billion, raising the low end. It also lifted its total expense forecast to $165 billion to $169 billion. The shares fell about 11% in after-hours trading on the release. The recovery since then has been driven largely by the Muse product cycle.

Valuation

At Monday’s close, Meta trades at about 28 times trailing earnings of $26.55 per share, with a market value of $1.89 trillion. The PEG ratio is 1.25, and analysts expect full-year EPS of about $27.94. On that estimate the forward multiple is only slightly below the trailing one. Analyst sentiment is broadly positive. The ratings tally shows 3 Strong Buy, 45 Buy and 9 Hold ratings, with an average price target of $791.47. Targets vary widely. BMO Capital Markets set $580 with a Market Perform rating in July, while Wells Fargo and Rothschild & Co Redburn are at $1,000. Cantor Fitzgerald recently trimmed its target to $840 from $860 and kept an Overweight rating. Compared with other megacap platform companies, Meta’s multiple is not extreme. The key debate is whether its unusually heavy spending will earn a return.

Bull Case versus Bear Case

The bull case is that Meta is adding new revenue streams to an ad business that is still growing fast. Strong advertising has been supported by AI-driven recommendation and automated ad tools across Reels, Instagram and Facebook. Paid API access and Muse subscriptions could bring in revenue beyond ads. Meta’s reach of more than 3.5 billion daily users gives it a distribution advantage that few AI rivals can match. Even concern over insider selling has eased. Recent sales by Mark Zuckerberg and COO Javier Olivan were made under pre-arranged Rule 10b5-1 plans.

The bear case is about cash and courts. Spending on the scale Meta has guided is compressing free cash flow and raising debt. Legal risks are also mounting. New Mexico asked a judge on October 1 to order up to $40 billion in penalties. Florida’s attorney general rejected a proposed multistate settlement. The FTC has asked an appeals court to revive its antitrust case seeking divestiture of Instagram and WhatsApp. Management has warned that youth-related trials scheduled for 2026 could result in a material loss. Sentiment is not uniformly upbeat either. Retail investor sentiment was bearish even as the stock rallied.

Meta’s Next Test: Third-Quarter Earnings and Muse Adoption

The next major test is third-quarter earnings, which Meta has not yet scheduled publicly. Investors will look at whether revenue lands within the $61 billion to $64 billion range and whether 2027 capital spending plans rise again. Early signs of how many people pay for Muse subscriptions or use the Muse Wonder API will matter too. Outside the earnings report, rulings in the New Mexico case and the FTC appeal are the main event risks. So is the safety evaluation report Meta has promised for its new models.