What’s Meta to do with all this compute?
Alexandr Wang, chief AI officer of Meta, during the Bloomberg Tech conference in San Francisco, California, US, on Thursday, June 4, 2026.
David Paul Morris | Bloomberg | Getty Images
Since Zuckerberg spent billions of dollars overhauling the company’s AI unit and placed Wang as the division’s leader some 14 months ago, analysts at Baird Equity Research have noticed increased “positive sentiment” from investors, according to a Tuesday note that cited optimism over the Muse AI agents and related technologies.
The Baird analysts said that while Meta’s AI investments will help with future AI agent and foundation model monetization efforts, they “will continue to be the bigger needle-mover to quarterly results in the near-term.” That’s because those AI investments will still be improving Meta’s underlying online advertising platform that companies use to send targeted advertisements, they explained.
Investors have questioned why Meta needs to spend that much money on data centers when it doesn’t have a cloud computing business like rivals Google and Amazon. Wall Street may be more willing to cut the social network some slack because of its recent AI momentum.
The Baird analysts wrote:
As such, our ad checks are generally positive for Meta, and we expect an in-line Q3 report; we believe the street is better-informed on capex/margin pressures, and we believe a scenario where Meta raises capex guidance (2026/2027) could be received more positively (or less negatively) by investors now that the company is demonstrating a clearer ROI, despite the lack of a cloud platform.
— Jonathan Vanian
How Meta could make money from Muse
Meta is offering $20 and $100 monthly subscription plans for Muse AI agent power users. Right now, Muse is free to use but requires a subscription to run it with Meta’s latest model — Muse Wonder. The company is also charging developers $50 or $200 a month to access its most powerful Muse Wonder Full AI model via the Muse coding agent that debuted in early August.
Meta’s nascent subscription efforts represent opportunities for the company to expand beyond online advertising, which is still its core money maker. Investors have been concerned about the Facebook parent’s hefty AI investments relative to rivals like Alphabet and Amazon that have cloud computing businesses.
While AI-specific monetization efforts offer hope of diversification, they remains a longer-term play. Last week, Meta teamed up with longtime rival Apple to make Meta’s new open-weight AI model work with the iPhone maker’s high-end Mac computers. Unlike Meta’s proprietary AI models, coders can download the weights of Muse Spark Open for free.
Meta is betting that developers who try Muse Spark Open may eventually want to pay to access the company’s more powerful proprietary AI systems.
“These aren’t the most capable models that we’ve developed or released,” Wang said in an interview with CNBC. “But we think that there will be a lot of companies and developers who sort of use this model and tinker with it at small scale and then seek to ramp up and scale up their usage.”
—Jonathan Vanian
Meta Reality Labs expected to continue bleeding money
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., left, and Andrew Bosworth, chief technology officer and head of Reality Labs, wear Meta Ray-Ban Display AI glasses during the Meta Connect event in Menlo Park, California, US, on Wednesday, Sept. 17, 2025.
David Paul Morris | Bloomberg | Getty Images
Meta’s Reality Labs division, which is tasked with developing virtual reality headsets and AI-powered wearable devices, is expected to post a loss of $4.54 billion while generating $513 million in sales for the third quarter, according to StreetAccount.
In July when Meta reported second-quarter earnings, the company revealed that the Reality Labs unit lost $4.62 billion while bringing in $431 million during the period.
With the VR market struggling to catch on with consumers, Zuckerberg has since shifted Reality Labs resources to center on more on AI-driven hardware products like the Ray-Ban Meta smart glasses the company creates with eyewear giant EssilorLuxottica.
Still, Zuckerberg hasn’t completely abandoned VR and its sibling technology augmented reality. The CEO revealed in September during the company’s annual Connect conference for developers the Meta VR Glasses, which will cost $1,299 then they are released in the spring of 2027.
“We have built a new kind of VR device that delivers the same magical feeling of presence and immersion, high-resolution displays and views of the world around you in a form factor that is a pair of glasses for the first time,” Zuckerberg said at the time.
—Jonathan Vanian
Meta still depends heavily on online advertising
Wall Street may be pleased that Meta’s AI strategy involves subscription pushes and potential new revenue opportunities, but it will take a while before those efforts pay off. Until then, the company’s massive online advertising business continues to be its financial anchor.
Meta is expected to report third-quarter advertising revenue of $61.87 billion. The social media giant said in July that it posted $59.36 billion in second-quarter ad sales.
—Jonathan Vanian
Cambridge Analytica still haunts Zuckerberg
The Cambridge Analytica scandal from nearly a decade ago continues to haunt Zuckerberg and his social media empire.
New Mexico district court judge Francis Mathew imposed a $25 billion penalty on Meta today over a state data privacy case that derived from 2018 privacy revelations. The fine, revealed in a court filing, came after a jury in a Santa Fe courthouse determined that the company formally known as Facebook should be held liable for misleading New Mexico residents about its data handling practices and methods to prevent harmful information from spreading on its family of apps.
Although New Mexico was awarded $219.5 billion, based on the social media company committing over 43 million violations of the state’s unfair practices act, the judge reduced that figure to $25 billion.
“Facebook did not conduct the comprehensive investigation that it promised” following the Cambridge Analytica revelations, judge Mathew wrote in the filing, regarding the company’s then pledge to examine the “data misuse.”
—Jonathan Vanian
What analyst expect with Meta’s Muse and AI agents
Muse signage during a preview event ahead of Meta Connect in Menlo Park, California, US, on Tuesday, Sept. 22, 2026.
David Paul Morris | Bloomberg | Getty Images
Analysts at Bank of America wrote in a note published Friday that they expect Meta to post a sales beat, with revenue of $63.8 billion, based in part on the firm’s “solid ad checks” with brands and companies that helps determine the health of the digital ad market.
The analysts don’t expect Muse to contribute significantly to Meta’s overall business for the rest of this year and 2027 and instead “will consume capacity w/o near-term revs.,” meaning that the company’s AI agent efforts will take some time to grow into something bigger.
Morgan Stanley analysts agree that Meta’s Muse AI agent initiatives won’t generate big sales anytime soon, and while they said in a Sunday research note that they are “bullish,” they “encourage investors to keep reasonable adoption rates in perspective.”
The analysts explained that it takes a long time for new technology habits and behaviors to normalize. In 2000, when the e-commerce boom was just five years deep, for instance, the analysts noted that online retail “only made up 4% of adj retail sales” while adding that “even ~30 years in (’26) it’s still only 28%.”
— Jonathan Vanian
Meta sets the stage for hyperscaler earnings
Meta will be the first hyperscaler to reveal quarterly financials during this tech earnings cycle, with Alphabet, Microsoft and Amazon slated to report next week.
The four companies combined have called for roughly $730 billion in capital expenditures this year as they stock up on graphics processing units and AI systems and look to build massive data centers around the globe.
Analysts polled by FactSet expect that number to hit around $1 trillion next year, led by Alphabet, which is projected to spend over $310 billion. The stepped up spending comes as interest rates soar and concerns intensify that AI revenue won’t justify the costs.
Alphabet and Microsoft are scheduled to report earnings next Wednesday, followed by Amazon on Thursday.
— Jonathan Vanian
Meta’s legal headaches and state AG settlement
Meta’s past quarter wasn’t all AI agents and good vibes.
The social media giant agreed in August to pay nearly $17 billion to settle a major lawsuit involving a group of state attorneys general, including California’s Rob Bonta. The trial centered around allegations that Meta misled the public about the true scope of child mental health related harms caused by certain design elements of apps like Facebook and Instagram, including recommendation algorithms.
Meta’s state AG settlement could cause the company to miss on third-quarter earnings per share due to the related $10 billion legal charge that “the street has not yet accounted for,” Wolfe Research analysts wrote in a Monday note.
The company still faces numerous personal injury claims and a separate federal case involving a group of nationwide school districts that also focus on allegations that apps like Instagram have had detrimental effects on the well being of children.
— Jonathan Vanian
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