Meta's AI assistant Muse is moving from concept to a commercial closed loop, and Wall Street's valuation logic for the company is being rebuilt accordingly.

According to a research note released after the Meta Connect conference, JPMorgan raised its price target on Meta Platforms from $820 to $920 while maintaining an overweight rating. As of the report date, Meta shares traded at $744.10. The core driver of the upgrade is the increasingly clear monetization path for Muse — Meta CEO Mark Zuckerberg explicitly stated at Connect that the company will in the future charge a small fee on transactions completed through Muse, marking a substantive shift in Muse's monetization model from subscriptions to transaction-based commissions.

JPMorgan analyst Doug Anmuth noted in the report that with the rapid expansion of the Muse Connector ecosystem and the imminent release of the frontier model Watermelon, Meta is building a new growth curve outside its core advertising business that could reach tens of trillions of dollars in scale. The price target adjustment is based on a valuation of about 26 times projected 2028 GAAP earnings per share of $35.44, up markedly from the 23 times multiple used previously.

Muse Monetization Path Becomes Clear, Commission Model Mirrors Advertising Business

The core logic of Muse's business model is gradually taking shape. The JPMorgan report noted that Muse's current monetization scale is limited, possibly involving only a small number of heavy-usage subscriptions, but Zuckerberg reiterated at Connect that Meta will over time charge a small fee on transactions occurring on the platform.

The report views Muse Connector as the key infrastructure that completes the monetization chain. Connector allows Muse to establish connections with external websites, apps and merchants, and has already received more than 2,000 integration applications. At the Connect conference, Meta announced integration partnerships with Walmart, Best Buy, Sephora and Wayfair, following earlier participants including OpenTable, Spotify, Ticketmaster, Peloton, Expedia and Instacart. Meta simultaneously launched the Muse Connector platform, opening interfaces to developers to allow them to connect their own apps and services into the Muse ecosystem.

JPMorgan expects that as tens of millions or even hundreds of millions of merchants eventually deploy their own agents on Muse, transactions on the platform will increasingly be completed through agent-to-agent interactions rather than traditional browsing or phone calls. At that point, Meta can charge a commission or fee based on transaction value, or adopt goal-oriented pricing similar to its existing advertising business based on merchants' specific business objectives. The bank believes this monetization logic is highly similar to the underlying framework of Meta's advertising business and is capable of scaling.

Watermelon Model Imminent, API Commercialization Opens New Space

JPMorgan expects Meta's most capable frontier model, Watermelon, to be released in the coming weeks. The report argues that Watermelon's launch will strengthen Meta's AI commercial value in two dimensions: first, by enhancing reasoning capabilities to directly improve Muse's product performance; second, by opening greater monetization space for the Meta Model API.

The report noted that if Watermelon offers frontier model API access at pricing significantly below competitors, it would be strongly attractive to developers and enterprise customers, thereby driving a substantial increase in call volumes. JPMorgan views the Meta Model API as a third monetization pillar independent of advertising and Muse, and believes that the backing of a frontier model will materially enhance the commercial potential of this business.

On financial forecasts, JPMorgan expects Meta's revenue from 2026 to 2028 to reach $254.3 billion, $305.3 billion and $354.4 billion respectively, corresponding to annual growth of 26.5%, 20.0% and 16.1%. Adjusted earnings per share are expected to grow from $36.46 in 2026 to $46.07 in 2028. Notably, dragged down by large-scale capital expenditure, the bank expects the company's free cash flow to remain negative from 2026 to 2028, with capital expenditure as a proportion of revenue expected to rise to around 80% in 2027 and 2028.

Hardware Ecosystem Accelerates, Wearables Connect to Muse Entry Points

At the Connect conference, Meta clearly shifted Reality Labs' strategic focus toward wearables serving Muse and personal superintelligence, positioning glasses as its largest hardware opportunity with a target of reaching more than 2 billion glasses wearers globally.

On the product level, Meta launched Ray-Ban Meta Audio, integrating headphone functionality with AI into a lightweight 43-gram frame priced at $349, with shipping starting October 13. The simultaneously released Ray-Ban Meta (third generation) improves battery life versus the previous generation (9 hours versus 8 hours), offers 27 color and lens combinations, and is priced at $449, now available for purchase. In addition, Meta introduced glasses designed by Kyle Jenner and a LISA collaboration, both starting at $399; the entry-level Meta Adventurer is priced at $249. Meta also announced expanding glasses sales to Singapore, South Korea, Mexico and the UAE, with entry into the Brazilian market coming soon.

Meta also unveiled the handheld device Muse Charm, equipped with an approximately 2-inch display and an onboard 5G module, allowing users to access their personal Muse avatar, expected to go on sale before the end of the year. In VR, Meta released Meta VR Glasses, weighing about 100 grams — roughly one-fifth of Meta Quest 3 — with a built-in Meta AI agent and IMAX Enhanced certification, priced at $1,299 and expected to ship in spring 2027.

Valuation Rebuilt, Long-Term TAM Supports Premium

JPMorgan raised its target valuation multiple from 23 times to 26 times, citing increased confidence in the visibility of Meta's revenue growth, its continued cost optimization capabilities and the certainty of its AI monetization path. The report emphasized that even using 2028 GAAP earnings per share of $35.44 as the valuation basis, that forecast itself may be conservative.

Under a longer-term narrative framework, JPMorgan believes Muse has the potential to become the largest consumer AI application by user scale since ChatGPT. The report cited Meta's remarks at Connect that Muse has already reached millions of users, and that Meta aims to build it into a superintelligence platform for billions of users worldwide, corresponding to a potential market size that could reach the tens of trillions of dollars.