Meta Platforms Inc. (META): Citi reiterates Buy on Meta as Muse adoption and AI-device expansion strengthen the product roadmap

Overview

Citi’s Meta Connect review argues that Muse is emerging as the centerpiece of Meta’s AI product strategy. The report links strong early adoption, a growing partner ecosystem, faster model releases and new wearable devices to improved product visibility and reiterates a Buy rating and US$800 target price.

Core views

Citi emerged from Meta Connect incrementally positive on Meta shares, arguing that the company’s AI strategy is becoming clearer across Muse, its models and new devices. The central thesis is that Muse can become a personal AI agent embedded in daily activities—helping users shop, plan travel, manage productivity tasks, communicate and build products. Citi believes that voice capability, distribution through Meta glasses and service integrations can connect consumer intent with execution, creating incremental monetization opportunities over time. The report highlights a rapidly expanding commerce and services ecosystem. Announced partners include Walmart and Shopify in shopping, Instacart in grocery, Expedia in travel, and Box and GitHub in productivity, while Stripe and PayPal support payments. Meta had received more than 1,500 Connector Platform applications as third-party platforms integrate APIs into Muse. Citi notes that 36% of U.S. shoppers discover new products through social media, based on a July 2026 eMarketer survey, and therefore views transactions as a core Muse use case. Monetization remains early and management is focused on usage and adoption, but Citi sees potential for transaction take rates, subscriptions and Feed-based advertising. Amazon had blocked Muse shopping activity over unauthorized AI-agent access and merchant-control concerns; Citi nevertheless believes Amazon could ultimately become a connected partner. Early usage is the report’s principal evidence for product-market fit. Citing Sensor Tower, Citi says Muse reached roughly 3.1 million U.S. app downloads in its first 15 days and DAUs approaching roughly 725,000. Recent daily U.S. downloads exceeded those of Facebook, Instagram, WhatsApp and Threads. Citi says this launch trajectory appears ahead of the respective launches of ChatGPT, Gemini and Meta AI, despite Muse initially being U.S.-only; Muse had expanded to Canada, with more-country availability expected. New functions—including Mac computer use, a dedicated Muse email address, personalized real-time voice for calls to U.S. businesses and a tested human-concierge service—are presented as further reasons adoption could progress toward Meta’s stated goal of billions of users over coming years. Meta’s device roadmap broadens the distribution case. The company expects to offer more than 100 AI-glasses styles by year-end 2026, with new types and form factors that Citi believes could drive category adoption into 2027 as Muse is integrated into the devices. Product additions include Ray-Ban Meta Gen 3 glasses with a slimmer design and longer battery life, 51 Meta Glasses style combinations, online and European availability for Meta Ray-Ban Display, and camera-free Ray-Ban Meta Audio. Meta also introduced approximately 100-gram VR Glasses—five times lighter than Quest 3—with Muse integrated into the operating system. Citi considers the form factor potentially comfortable enough to support VR adoption; the US$1,299 device is expected to ship in spring 2027. The report also identifies accelerating model development as support for the broader AI roadmap. Although Meta had not yet released its state-of-the-art Watermelon model, it was being optimized for personal-agent workflows, memory and continuity, multi-app and cross-site tasks, and real-time voice, and is expected to power Muse when launched. The release cadence shortened from about 13 weeks between Muse Spark 1.0 and 1.1 to about four weeks between versions 1.1, 1.2 and 1.3. Citi highlights improvements in long-horizon task completion, multitasking, instruction following, coding efficiency and safety, alongside rollout across Muse, Meta AI, glasses, Business Agents, Muse Code and the Model API. Consumer survey results add support for glasses adoption. Among more than 4,000 global consumers surveyed, 22% owned an AR/VR/smart-glasses device at home, representing 877 respondents; 36% of those owners, or 316 respondents, had Meta Glasses. Of the 21.5% planning to buy an AR/VR/smart-glasses device over the next 12 months, representing 860 respondents, 24%—or 206 respondents—planned to purchase Meta Glasses. Citi values Meta at approximately 22x its 2027E GAAP EPS of US$36.92, producing its US$800 target price and implying roughly 11x 2027E EV/EBITDA. At US$744 per share, Citi states that META traded at roughly 20x its 2027E GAAP EPS estimate. The firm bases the valuation on Meta’s user scale, rising engagement, product supercycle and AI opportunity, advertising innovation and revenue growth, while monitoring investment levels and profitability. Citi reiterates Buy, viewing Reels as able to compete effectively in short-form video and expecting continued benefits from improving monetization.

Analysis framework

Citi combines product-event analysis from Meta Connect with app-download and DAU comparisons, partnership and product-roadmap tracking, a global consumer survey on wearable adoption, and earnings-based valuation. It connects product adoption and distribution to possible future transaction, subscription and advertising revenue, then values the shares using a 2027 GAAP EPS multiple and checks the implied EV/EBITDA multiple.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Price-to-earnings valuation using 2027E GAAP EPS

  Citi applies an approximately 22x multiple to its 2027E GAAP EPS estimate of US$36.92 to derive the US$800 target price; it also notes the target implies roughly 11x 2027E EV/EBITDA.

• Industry AnalysisPenetration-Rate S-Curve

  Early adoption and prospective wearable-device penetration

  The report uses Muse downloads, DAUs and consumer survey purchase intentions to assess whether AI-agent and smart-glasses adoption can broaden over time.

• Event-Driven and Behavioral FinanceEvent-driven analysis

  Meta Connect product-event assessment

  Citi evaluates new AI products, partner launches, model releases and devices announced at Meta Connect as catalysts for product visibility, adoption and potential monetization.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Meta Platforms Inc. (META.O)

  Primary covered company; Citi sees Muse, accelerating AI capabilities and expanding AI-device distribution as potential drivers of greater product visibility and returns.

  Strengths

  Rapid Muse adoption, broad partner integrations, scaled user base, growing engagement, advertising innovation, AI opportunity and expanding glasses portfolio.

  Weaknesses

  Muse monetization remains early; Meta is increasing compute capacity and investment needs remain a focus.

  Comparison

  Citi states Muse’s early launch trajectory appears ahead of ChatGPT, Gemini and Meta AI at their respective launches, and recent daily U.S. downloads exceeded Meta’s individual Family of Apps.

  Risks

  Advertising disruption, softer ad spending, stronger competition, weak non-advertising investment returns, adverse consumer conditions and regulatory pressure could affect performance.

Key data

• Muse U.S. downloads~3.1 millionReached in the first 15 days after launch.
• Muse DAUs~725,000Approaching this level within two weeks of launch.
• Connector Platform applications1,500+Applications received as third-party platforms integrate APIs into Muse.
• Expected AI-glasses styles100+Meta expects to offer more than 100 styles by year-end 2026.
• Meta Glasses ownership36%Share of AR/VR/smart-glasses owners in Citi’s global consumer survey; 316 respondents.
• Meta Glasses purchase intent24%Share of respondents planning an AR/VR/smart-glasses purchase in the next 12 months; 206 respondents.
• 2027E GAAP EPSUS$36.92Citi estimate used for valuation.
• Target valuation~22x 2027E GAAP EPSSupports Citi’s US$800 target price and implies ~11x 2027E EV/EBITDA.
• Expected total return7.8%Comprises 7.5% expected share-price return and 0.3% expected dividend yield.

Impact & implications

Citi believes stronger visibility into Muse’s adoption, services ecosystem, model progress and wearable distribution can support Meta’s shares. The report sees a pathway from high-intent agent-assisted activity to transaction fees, subscriptions and advertising, but stresses that monetization is still at an early stage and that investment and profitability remain important monitoring points.

Risks

• Changes to ATT and IDFA could be harder to overcome than anticipated and structurally affect Meta’s advertising business.
• Online advertising spending could decelerate faster than Citi expects.
• Competition could have a greater impact than anticipated.
• Meta may fail to generate meaningful contributions from investments in non-advertising businesses, including the metaverse.
• Adverse economic or consumer-spending trends could reduce advertising spending.
• Antitrust, data and privacy regulatory pressures could adversely affect performance.

What to watch

• Muse downloads, adoption, daily active users and expansion beyond the initial U.S. and Canada availability.
• New Connector partnerships and whether Muse can deepen commerce, travel, productivity and payment transactions.
• Progress toward monetization through transaction take rates, subscriptions and Feed-based advertising.
• The Watermelon model launch and continued improvement in agentic capabilities.
• AI-glasses rollout, including more than 100 styles by year-end 2026, and the spring 2027 launch of Meta VR Glasses.
• Meta’s investment levels and overall profitability.