Meta's stock heads for best week since early 2024 as optimism builds around AI strategy

Meta shares rallied on Friday, lifting their gains for the week to 15%, the best weekly performance since early 2024, as optimism builds around CEO Mark Zuckerberg's artificial intelligence strategy.

Three months after introducing Muse Spark, its first proprietary foundation AI model, Meta made two significant announcements this week. On Tuesday, Meta released Muse Image, a new AI model for creating images, and part of an effort to attract creators and advertisers to its new subscription offerings. And on Thursday, the company unveiled Muse Spark 1.1, aimed at running agentic and coding workloads.

This week's revelations show Meta is aggressively trying to make a splash in AI models and compete against OpenAI, Anthropic and Google, which all have big head starts. They also underscore the company's efforts to diversify beyond ads with new revenue streams, and point to progress at Meta Superintelligence Labs, which is being led by Alexandr Wang.

With the latest rally, the stock has erased its losses for the year and is now up more than 1%. It's still way behind the Nasdaq, which has gained 13%

Meta also got a boost from reports that the company is progressing with its custom, in-house AI chips, revealed back in March as part of its data center expansion plans. Meta expects to start manufacturing its first chip, code-named Iris, in September as part of its goal to reach 14 gigawatts of computing power next year, according to Reuters.

"Meta may have engineered significant cost savings to get capacity cost per MW well below our and Street expectations," Justin Post, an analyst at Bank of America analyst, wrote following the report.When Meta reported first-quarter earnings in April, the company raised 2026 guidance for its capital expenditures to as high as $145 billion. Its shares sank 7% as investors appeared concerned about Meta's big AI spending that has yet to create new lines of businesses.

Now that Meta is conveying to investors a more concrete plan about how it will use its ever-growing data center infrastructure, such as potentially competing in the cloud computing business against giants like Amazon and Microsoft, Wall Street is getting excited.

Meta could further increase its 2026 capex guidance when it reports its second-quarter earnings, BNP Paribas Equity Research senior analyst Nick Jomes said in a research note earlier this week. Jomes said that BNNP estimates Meta to raise that figure to come in between $135 billion and $155 billion.

"While we expect near-to medium term elevated capex, we believe Meta is well positioned to generate ample revenue to support its spending, driven by monetization of its own AI initiatives, advertising share gains, incremental subscription revenue, an optionality of cloud offering, and fees for external use of its AI models," Jomes wrote.