Meta Comes Out Swinging With Muse Spark
The company also continues to tie up AI and data center capacity.
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Mark Zuckerberg
Meta Platforms (META) made some very interesting back-to-back announcements between yesterday and today, and the combination has lifted the shares more than 10%, putting them on a path to their 50-day moving average near $634. That brings our overall position in the stock back into profitable territory, but we continue to see Meta benefiting as it expands its monetization efforts across more of its app footprint, leveraging AI to do so.
So, what were those back-to-back announcements?
Meta Gets a Spark
Wednesday, Meta unveiled Muse Spark, the first artificial intelligence model from a costly team it assembled last year to catch up with rivals in the AI race. Remember, last year Meta hired Scale AI CEO Alex Wang under a $14.3 billion deal and offered some engineers pay packages of hundreds of millions of dollars to staff a new superintelligence team. After disappointing results with its Llama 4AI model last year, the intended goal was to not only reclaim lost ground with those hirings but to propel itself forward. Muse Spark is the first superintelligence model from that team.
In the coming weeks, Muse Spark is expected to replace the existing Llama models powering chatbots on WhatsApp, Instagram, Facebook, and Meta's collection of smart glasses. So far, third-party evaluations of Muse Spark find it catching up with models from Google (GOOGL) , OpenAI, and Anthropic in areas such as language and visual understanding, but lagging in others like coding and abstract reasoning.
Getting back to the efforts to expand monetization and user engagement, Meta has teased shopping features embedded within its Meta AI chatbot that point users directly to products they can purchase, as well as help with everyday tasks. We expect to learn more about these efforts at upcoming company events, including its annual developer forum, better known as Meta Connect.
Meta Ponies Up Again With CoreWeave
Thursday morning Meta made a $21 billion commitment to AI cloud provider CoreWeave (CRWV) , adding to a prior arrangement of $14.2 billion that runs through 2031. Of course, we are more than familiar with CoreWeave given our position in Nvidia (NVDA) and SuRo Capital's (SSSS) position in CRWV. Meta's new commitment is expected to span 2027-2032, and in our view, it’s part of the company's efforts to line up existing supplier capacity to ensure ample coverage as it continues to expand its AI and data center footprint.
This move and similar ones in recent weeks by Meta suggest it expects capital spending to remain at elevated levels in the coming years. Whether it will remain in the telegraphed $115 billion-$135 billion range or land somewhere between that and the $72 billion spent in 2025 remains to be seen. Our gut says that it will be some time until we see capex levels return to the $30 billion-$35 billion averaged between 2022 and 2024. With that in mind, higher-for-longer capex levels by Meta likely mean the same at Microsoft (MSFT) , Amazon (AMZN) , and Alphabet, especially as AI adoption grows and usage proliferates.
We see that as very supportive for our long-term view on the Pro Portfolio’s chip and related AI and data center plays.
The Meta news is also helping further lift CRWV shares, adding to their sharp rebound from $69.15 on March 30. With that quick pop of more than 30%, we would not be surprised to learn SuRo has prudently trimmed some of its CRWV position.
Related: We're Raising Our Costco Price Target as It Laps Tough Sales Comps
At the time of publication, TheStreet Pro Portfolio was long AMZN, GOOGL, META, MSFT, NVDA, and SSSS.
