Meta Platform’s NASDAQ: META recently made what is arguably its most significant AI product release to date: the Muse personal AI agent.

This release, which allows individuals to deploy an AI agent that executes personal tasks, generated a fanfare among investors. Meta's stock rose over 6% on the day of this announcement, contributing to the substantial recovery seen in shares recently.

The announcement is certainly leading to real consumer interest, with Muse recently rising to number two on Apple’s NASDAQ: AAPL App Store’s Top Charts. However, Wall Street analysts have opposing views on how successful Muse will be. These are the key facts that investors should understand about Muse and what various analysts are saying about the product’s potential.

Meta Targets Agentic E-Commerce Opportunity With Muse

One of the key features of Muse is its ability to make purchases on behalf of the user. With this, Meta is targeting a market that some expect to become massive over the coming years. By 2030, consulting firm Bain & Company projects that the size of the U.S. agentic e-commerce market will hit between $300 billion and $500 billion. It estimates that this would account for 15% to 25% of the entire U.S. e-commerce market.

Meta is looking to participate in this space by giving people a way to execute agentic purchasing easily. It aims to monetize the growth in agentic commerce through subscriptions to Muse. It could conceivably offer token-based pricing in the future as well and pursue other monetization avenues, such as commissions.

Still, near-term revenue impacts for Meta may be limited because it offers a free tier of Muse. The free tier provides 100 million tokens of usage per week. Users can upgrade to 500 million weekly tokens for $20 a month or three billion weekly tokens for $100 a month.

However, 100 million tokens is a very significant amount, and would likely be difficult for many users to consume, decreasing the likelihood of paid adoption near term. The free offering is likely Meta’s strategy to generate interest in the product before adjusting the pricing model later. Nonetheless, every token Muse consumes without payment is simply a cost to Meta, which could damage near-term profitability.

What Wall Street Is Saying

As J.P. Morgan analyst Doug Anmuth notes, “Meta is not focused on the monetization of Muse in the near term," demonstrated by its free tier offering. However, Anmuth is bullish long-term, saying that Muse addresses a total addressable market (TAM) worth tens of trillions of dollars. However, this forecast likely extends over a very long timeframe. For reference, the economic output of the entire U.S. economy, measured by gross domestic product, is approximately $32.5 trillion. Additionally, it is important to recognize that TAM is a measure of the entire market that products like Muse would target, of which Meta could capture a portion.

Mizuho analyst Lloyd Walmsley also views the release positively, expecting Muse to be the beginning of a significant product cycle that is not yet priced into shares. This somewhat aligns with views recently expressed by analysts at Morgan Stanley. Morgan Stanley expects that after the conclusion of Meta’s $18 billion legal settlement, the company will increase its product release cadence. Muse provides initial evidence of this playing out.

However, analysts at Oppenheimer are pushing back on investor enthusiasm. The firm believes that Muse may see limited consumer adoption due to consumer distrust in the company.

To unlock Muse’s full capabilities, users must share their passwords from other platforms. In its consumer survey, only 8% of respondents said they would trust Meta with passwords. However, it is notable that Meta has implemented many security features into Muse that could mitigate these concerns.

Oppenheimer also notes that to achieve a 20% earnings per share uplift, Meta would need 115 million Muse users paying $20 per month. This is significantly higher than its estimates of ChatGPT’s paying subscribers, at 33 million to 88 million. Oppenheimer is skeptical that Muse would be able to achieve this many users when a more established platform like ChatGPT is still far from this level.

Muse AI Agent: Not an Overnight Game Changer, But a Step in the Right Direction

Overall, Muse is unlikely to provide meaningful financial benefits to Meta near term. In fact, there is a significant possibility that it hurts profitability near term as Meta allows users to consume tokens for free. Still, gaining AI product traction is an important first step to significant monetization.

The most important metrics to watch in the near term will be Muse’s user base growth and token consumption growth. This would indicate strong adoption of the tool, after which Meta could modify its monetization strategy to drive more revenue and improve profitability. Meta’s next earnings call provides an opportunity for the company to share such metrics so investors can gauge the product’s trajectory.

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