JPMorgan Upgrades Meta, but Warns AI Compute Could Hit Cash Flow

JPMorgan upgraded Meta to buy from neutral and raised its price target to $820, citing early traction for the company’s Muse personal AI agent and its broader push into AI products. The bank’s bullish call comes with a costly condition: it expects AI compute demand to put deep pressure on Meta’s free cash flow in 2027 and 2028.

Meta introduced Muse on September 8 as a personal AI agent powered by its Muse Spark models. It is rolling out in the United States on iOS, Android and muse.ai, with free access and subscription plans. Meta says Muse can take actions such as sending email and booking travel through a dedicated secure virtual machine.

JPMorgan analyst Doug Anmuth said Muse reached as high as No. 3 in the U.S. App Store on its second day, with early usage running at 10 times Meta’s training cohorts. He argued Meta is still at an early stage of releasing frontier models and AI-driven products beyond advertising, including Muse and Meta Model API access.

Anmuth’s forecast reflects a direct tradeoff in the bank’s thesis: successful AI products would also require more computing capacity to train and run them. The projected cash-flow deficit excludes potential revenue from AI products, making it a forecast of the investment burden before Muse or other AI offerings demonstrate direct returns.

JPMorgan is not treating Muse subscriptions as Meta’s only route to returns. Anmuth also pointed to potential AI-driven gains in Meta’s core advertising business through content recommendations and engagement, ad targeting and retrieval, and AI content creation.

Meta’s recent model update also made Muse Spark 1.3 with maximum reasoning available through Muse Code and the Meta Model API; Meta says it is designed for longer-running work across multiple workflows in one thread. For JPMorgan’s call, the important next evidence is whether early Muse use becomes durable demand and whether Meta’s AI improvements begin to strengthen its existing business as spending rises.