The news that Amazon (AMZN) is banning AI agents from its digital storefront should have absolutely ruined Meta Platforms (META)’s 11% rally yesterday. Instead, the stock shrugged it off – and Elon Musk shows exactly why.
As Elon tweeted yesterday: “Amazon won’t be able to tell whether the buyer is a human or an AI acting on their behalf if access is via the user’s IP address & cookies.”
Put differently, this isn’t something Amazon will easily be able to enforce so long as Muse users are smart about how they use the agent.
No wonder the market ignored the announcement and piled into Meta anyway.
The arc bends toward Meta
Meta has been languishing for the last several months thanks to the perception that it’s not a serious contender for the AI frontier. That fight has been exclusively among OpenAI’s ChatGPT or Anthropic’s Claude (and occasionally Alphabet (GOOG)’s Gemini and SpaceX (SPCX)’s Grok), with Meta nowhere to be seen.
Then Meta launched Muse, its new AI agent, which promptly rocketed to top the charts at the Apple and Google app stores (dethroning ChatGPT, no less, as the #1 most downloaded free app).
Muse is a huge opportunity for Meta, no doubt – and given that Meta owns plenty of compute – unlike Alphabet, OpenAI, and Anthropic, all of whom are renting (including from SpaceX) – there are real scale and cost advantages at play in its favor.
Plus, unlike everyone else in this battle – Meta has an installed base of 3.6 billion users across its platforms, and an extensive history of monetizing via ads.
It gets better
Let’s face facts – even if Meta is relegated to the second tier of AI companies, where Alphabet and SpaceX are both languishing right now – there’s still a great deal to like about the business.
Consider their improving gross margins…
Not to mention soaring EPS…
…and there are many ways Meta can win from here.
Plus, Meta’s next frontier model, Watermelon, is due to come out soon and could scramble the AI race all over again.
Meta shares could be worth $1,000+…here’s why:
Using TIKR’s proprietary valuation model, I plugged in just three numbers:
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Revenue growth based on consensus estimates through 2029
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Average operating margins based on consensus estimates through 2029 (which assume a sharp decline in operating margin, so they could be very conservative!)
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A P/E multiple that matches the average over the past three years
…and when I flowed those through, it returned an implied valuation of over $1,000.
Create your own valuation model using institutional-quality data…for free.