Meta Platforms staged its best weekly rally in 18 months after unveiling a slate of AI products that convinced investors the company's $125 billion spending plan has a payoff.
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Meta rallies 15% in a week as AI strategy gains traction
Meta Platforms shares surged 15% last week, their best performance since early 2024, as the social media giant's rebuilt AI organization began delivering products that could open new revenue streams beyond advertising.
"Meta may have engineered significant cost savings to get capacity cost per MW well below our and Street expectations," Justin Post, an analyst at Bank of America, said.
The rally followed a flurry of announcements. On Tuesday, Meta released Muse Image, an AI image-generation model targeting creators and advertisers. On Thursday, it launched Muse Spark 1.1, a coding and agentic model that Chief Executive Officer Mark Zuckerberg called "a strong agentic and coding model at a very low price." The company also expects to begin manufacturing its first custom AI chip, code-named Iris, in September, according to Reuters. Independent research firm SemiAnalysis issued a report giving Meta high marks for rebuilding its AI organization from scratch after the Llama 4 release was widely seen as a disappointment.
The moves signal that Meta's massive capital expenditure program — raised to $125 billion to $145 billion for 2026 in April — is translating into tangible products. BNP Paribas analyst Nick Jomes estimates Meta could raise that figure further to between $135 billion and $155 billion when it reports second-quarter earnings. Meta shares, trading at 24 times earnings, have erased their year-to-date losses and now sit flat for 2026, compared with the Nasdaq-100's 18% gain.
The week's gains mark a sharp reversal for a stock that had been one of the year's worst mega-cap performers. Meta's first-quarter earnings in April triggered a 7% selloff after the company raised its 2026 capex guidance without a clear path to monetization. Investors worried that Zuckerberg was repeating the metaverse-era pattern of heavy spending before revenue materialized.
What changed this week was specificity. Muse Spark 1.1 competes directly with coding models from OpenAI and Anthropic, two companies that have dominated the frontier AI conversation. Muse Image targets the creator economy, a market Meta already monetizes through advertising. And the Iris chip program, if successful, could reduce Meta's dependence on Nvidia GPUs — a cost line that has ballooned alongside the company's data center expansion.
SemiAnalysis, in its report on Meta's AI restructuring, said the company is now "on track to be world-class" at all three ingredients needed for frontier models: data, talent, and compute. The firm called this "an extremely underappreciated advantage for Meta Superintelligence Leadership."
Options activity reflected the renewed optimism. Friday's options volume ran more than three times the 30-day average, with 78% of the $1.8 billion in premium tied to calls, according to Cboe LiveVol and SpotGamma data. The most popular near-term bet was the $675 strike call expiring Friday, which needed Meta to add another 2% by the bell.
Meta is now exploring additional revenue streams beyond its core advertising business. The company has detailed plans to sell access to its AI computing capacity, potentially competing in cloud computing against Amazon Web Services and Microsoft Azure. It is also considering fees for external use of its AI models and subscription offerings tied to its creator tools.
This article is for informational purposes only and does not constitute investment advice.
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