Morgan Stanley Backs Meta (META.US): Muse Ecosystem Continues to Expand, VR Glasses Expected to Become a New Growth Driver by 2027

Morgan Stanley's latest research report points out that Meta Platforms' (META.US) Muse personal AI assistant ecosystem continues to grow and may open up new growth space through new products such as lighter VR glasses. The bank maintains its "Overweight" rating on Meta, with a target price of $775, and continues to list it as a top pick. Muse Ecosystem Expansion: Retail Giants Such as Walmart Inc. Join The report notes that Meta recently announced Muse partnerships with several retailers, including Walmart Inc., Best Buy Co., Inc., Dick's Sporting Goods, Inc., and Gap. Morgan Stanley believes these "connectors" help eliminate friction in users' shopping and purchasing processes, ultimately unlocking a TAM (total addressable market) of approximately $30 trillion in consumer agentic spending. Morgan Stanley states that although transaction commission rates are expected to be extremely low, even negligible, Meta is focused on building and expanding its ecosystem of users, engagement, and commercial behavior in order to monetize over the long term. The report also notes that keeping commissions low will put pressure on future competitors' agent products, and Alphabet Inc. Class C and other private companies may need to follow with similar terms or lose market share. In addition, Walmart Inc.'s participation may prompt Amazon.com, Inc. to follow suit to avoid long-term share loss. Voice and Wearables: Muse Voice Launch Imminent, Full AR Glasses Integration On the voice and wearables front, Meta showcased a new voice feature, Muse Voice, expected to be released in the coming weeks, which will enable Muse to respond to users in a personalized, customized, and conversational way. At the same time, Muse will be fully integrated into Meta's latest AR glasses (all brands), allowing users to talk to Muse through the glasses without taking out their phones, which is expected to drive greater adoption, engagement, and use cases, and unlock more long-term commercial opportunities. Expansion Continues: Muse to Enter More Markets, Integrate with Apple Inc. Computers, and Launch a Dedicated Email Meta is expected to launch Muse in more countries outside the United States and Canada soon, and announced that Muse has been integrated into Apple Inc. computers. Muse will also soon have its own email address, which will make it a more powerful assistant and could over the long term shift user behavior from Gmail to Meta's email/chat system. New Hardware Moves: Muse Charm and Lightweight VR Glasses Meta also showcased a handheld/keychain-style device, Muse Charm, expected to ship during the holiday season. Although details are limited, the Charm is very small and allows users to interact with Muse on the go, further integrating Muse into consumers' daily lives. In addition, Meta released a lightweight VR glasses product weighing less than one-fifth of the Quest 3, with an appearance more like ordinary glasses than a bulky headset. The product will be released next spring, starting at $1,299, and will directly integrate Muse functionality into the operating system. The new glasses will combine VR/3D gaming, entertainment (movies, TV, concerts/events, with 100 live sports broadcasts expected to be introduced in 2027), and productivity tools (a full virtual multi-screen dynamic desktop and keyboard). Morgan Stanley says that although it had previously been skeptical of Meta's investments in AR/VR, this product represents a significant improvement in size and performance and could become an important catalyst for the stock price in 2027. The report emphasizes that the current stock price has not priced in any success in the AR/VR business. Core Logic: Meta Is Advancing a Structural Transformation, Three "Call Options" Are Undervalued Morgan Stanley gives Meta an "Overweight" rating and a target price of $775, with a bull case of up to $1,000. Morgan Stanley believes Meta is undergoing a structural transformation, focusing on multi-year efficiency, productivity, and leaner operations. The bank points out that the "Year of Efficiency" is not just a 365-day short-term adjustment, but a structural shift in operating model and corporate culture, intended to operate more leanly and focus more on investor returns, even during an investment cycle. At the same time, revenue and engagement trends on Meta's platforms are also improving. Morgan Stanley's conversations with the industry and the company show continued progress in Reels engagement and monetization, as well as optimization in post-IDFA advertising measurement and attribution. In addition, Morgan Stanley believes there are three undervalued "call options": 1) further upside driven by AI; 2) adoption of subscription services; 3) growth in click-to-message advertising.