Meta Strikes $10 Billion Cloud Deal With Google Amid AI

MENLO PARK, Calif. — Shares of Meta Platforms Inc. rose more than 2.5% Thursday as the social media and artificial intelligence powerhouse benefited from broad risk-on sentiment following a reported two-week ceasefire in Iran and positive reaction to the launch of its latest large language model, Muse Spark, designed to advance the company's ambitious AI ambitions.

The stock climbed as high as $628.09 midday, up $15.67 or 2.56%, on solid volume. The move helped recover some ground after earlier volatility in 2026 and came as investors rotated back into high-growth technology names amid easing geopolitical tensions.

Meta, the parent of Facebook, Instagram, WhatsApp and Threads, has aggressively invested in artificial intelligence to enhance advertising efficiency, content recommendations and new product experiences. The release of Muse Spark — described as the company's most powerful model yet from its Superintelligence Labs — marked a significant step in Meta's push to catch up in frontier AI capabilities after earlier Llama models drew mixed reviews from developers.

Unlike previous open-source Llama releases, Muse Spark is initially proprietary, though Meta indicated plans to eventually open-source certain versions. The model emphasizes native multimodality, advanced reasoning with tool use, visual chain-of-thought and multi-agent orchestration, capabilities the company hopes will translate into stronger ad performance and new monetization avenues.

The timing aligned with a broader market rally triggered by news of a ceasefire agreement involving Iran, which reduced immediate macroeconomic and energy-related concerns and encouraged buying in risk assets. Tech stocks broadly advanced, giving Meta an additional tailwind as investors sought exposure to AI leaders.

Meta's core advertising business remains exceptionally strong. The company's family of apps reached more than 3.58 billion daily active users in late 2025, providing an unmatched dataset for training AI systems and delivering targeted ads. Advertising revenue continues to dominate, accounting for nearly all of the company's top line, with AI improvements in ad ranking and creative generation driving measurable lifts in clicks and conversions.

In its fourth-quarter 2025 results released in late January, Meta reported revenue of $59.89 billion, beating expectations, with adjusted earnings per share of $8.88. The company guided first-quarter 2026 revenue between $53.5 billion and $56.5 billion, incorporating a roughly 4% foreign currency tailwind. Full-year 2026 capital expenditures are projected at a massive $115 billion to $135 billion, heavily weighted toward AI infrastructure, data centers and compute capacity to support growing model training and inference demands.

Chief Executive Mark Zuckerberg has framed 2026 as a pivotal year for AI integration across Meta's platforms. The company aims to let advertisers create fully AI-generated campaigns by inputting little more than a product link, with the system handling visuals, text, targeting and budgeting. Early tests of tools like the Meta AI business assistant and enhanced ads ranking models have already shown gains, including a 3.5% lift in Facebook ad clicks in late 2025.

Reality Labs, Meta's augmented and virtual reality division behind Quest headsets and Ray-Ban smart glasses, continues to post losses but is seen as a long-term bet on the metaverse and wearable computing. Recent smart glasses momentum and AI features in wearable devices have helped temper concerns about the division's cash burn.

Analysts remain largely bullish despite the elevated spending outlook. Consensus price targets sit well above current levels, with some firms like Citizens reiterating Outperform ratings and targets near $900, citing robust user engagement growth and advertising market share gains. Time spent on Meta platforms has risen sharply — global growth exceeding 17% year-over-year in recent months — outpacing modest gains in monthly active users.

Still, risks are evident. Meta faces ongoing legal and regulatory pressures, including lawsuits alleging harm to young users and addictive design features. A $375 million penalty in New Mexico and other cases have drawn attention, though the financial impact so far appears manageable relative to Meta's scale. Privacy scrutiny in Europe and other markets, along with potential restrictions on youth access, could weigh on future growth.

Capital intensity is another focal point. The planned $115 billion-plus in 2026 capex represents a sharp increase from prior years and has sparked debate about returns on AI infrastructure. Meta is also pursuing large-scale energy and compute deals, including a reported $27 billion capacity agreement to secure resources for its AI buildout.

First-quarter 2026 earnings are scheduled for release after the market close on April 29, with a conference call to follow. Investors will scrutinize advertising trends, progress on AI monetization, updated full-year guidance and any commentary on the efficiency of recent model releases. Consensus calls for solid revenue growth, though full-year 2026 expansion is expected to moderate somewhat from the first quarter as currency benefits fade.

Meta's market capitalization hovers near $1.55 trillion, positioning it among the world's most valuable companies. The stock has traded in a wide range in 2026, reflecting swings in AI enthusiasm and macroeconomic sentiment, but remains well above multi-year lows.

Longer term, Meta is betting that heavy AI investment will compound its advantages in digital advertising while opening new frontiers in consumer AI tools and potentially hardware. Zuckerberg has spoken of building "personal superintelligence" — AI deeply attuned to individual user goals and interests — that could redefine how people interact with technology.

For now, Thursday's gain reflected a mix of company-specific progress on Muse Spark and favorable macro conditions. Options activity and retail interest have remained elevated, consistent with Meta's status as a bellwether for both social media trends and the broader AI investment cycle.

Broader industry dynamics favor Meta's position. Digital advertising continues shifting toward platforms with sophisticated AI targeting, where Meta holds a dominant share. Competitors like TikTok, YouTube and emerging AI-native services provide pressure, but Meta's scale and data moat offer resilience.

As the company prepares for its earnings report later this month, attention will center on whether AI spending is translating into accelerated revenue quality and whether management can reassure investors that the massive capital outlays will deliver attractive long-term returns.

With user engagement strong, advertising tools improving and new models like Muse Spark entering the fray, Meta enters the heart of 2026 with momentum in its core business and a clear — if expensive — roadmap for AI leadership. Whether that combination justifies current valuations and supports further upside will be tested in the quarters ahead.