This earnings season could be the moment investors stop complaining (or complain less) about Big Tech capex.
AI’s biggest spenders might be able to breathe a little easier as they head toward third-quarter earnings, thanks to Meta’s agentic AI, Muse. The product takes AI a step further than traditional chat bots that have become ubiquitous in the last four years.
Where AI for most people has been akin to an elevated, more eloquent search engine, Muse and other agentic AI tools feel like a leap forward in the technology, capable of acting without being prompted.
Consumers, so far, are enthralled.
Muse has reached over 2 million daily users and 3 million downloads. Meta’s stock has surged 22% since September 8, driven by investor excitement for the next chapter of the AI story.
And it’s that excitement that could help investors calm down about the billions being poured into the AI buildout this earnings season.
Muse’s success could be the signal that Meta — and by extension, other hyperscalers like Microsoft, Alphabet, and Amazon — aren’t throwing cash into a black hole.
Their recent skepticism could ease up, as they see a clearer path to monetization, said Ross Mayfield, an investment strategist at Baird. He called Muse the first big app of the AI era, and likened it to the revolutionary dynamic that an app like Uber brought when it first launched.
“It’s a great first start, and it should, in theory, assuage some fear that it’s all for nothing,” Mayfield told Business Insider. “At the very least, you can see, ‘All right, here’s a product that is super popular and clearly super useful to people, more so than just making funny photos or asking questions.'”
Muse’s success means others will try to copy it (Amazon has already blocked it on its platforms, signaling it could be working on its own agent), which means more capex being sunk into AI infrastructure companies.
Not everyone thinks hyperscalers will get a free pass on capex now that AI agents are in the zeitgeist.
Lance Roberts, the chief investment officer at RIA Advisors, said that while firms like Meta, Alphabet, Microsoft, and Amazon have impressive track records that investors should keep in mind, capex will still be top of mind this earnings season as investors have yet to see if Muse and other future products can be effectively monetized.
Ben McMillan, the chief investment officer at IDX Advisors, had similar thoughts, saying that Meta still has to show its plan for how to turn Muse, which is free for users currently, into a cash cow.
“Meta’s built-in audience buys it time, but only so much, especially with yields now starting to compete for investor capital,” he told Business Insider. “Meta arguably has a straighter path to increased ad revenue from Muse (vs. others), but they need to show it.”