Meta stock surges 15% as company releases Muse Spark 1.1 agentic model and Muse Image generator

Meta's stock rose 15% this week, marking its best weekly performance since early 2024, following the release of two new AI models aimed at competing with OpenAI, Anthropic, and Google.

On Thursday, Meta released Muse Spark 1.1, an updated version of its foundation model designed for agentic and coding workloads. Two days earlier, the company unveiled Muse Image, an AI model for image generation targeted at creators and advertisers on its subscription platform.

The releases follow Meta's introduction of Muse Spark three months ago, the company's first proprietary foundation AI model. CEO Mark Zuckerberg is leading an aggressive push into AI model development through Meta Superintelligence Labs, headed by Alexandr Wang.

Stock performance and market context

The 15% weekly gain erased Meta's year-to-date losses, bringing the stock up 2% for 2026. The Nasdaq, by comparison, has gained 13% this year.

Meta shares gained an additional 6% on Friday alone, according to CNBC reports.

Custom chip development underway

Meta received a further boost from reports of progress on its custom AI chips. According to Reuters, the company plans to begin manufacturing its first chip, code-named Iris, in September. The chip is part of Meta's data center expansion strategy announced in March, with a target of reaching 14 gigawatts of computing power in 2027.

Justin Post, a Bank of America analyst, noted that "Meta may have engineered significant cost savings to get capacity cost per MW well below our and Street expectations."

What this means

Meta is making a concentrated effort to establish itself as a major player in AI models, moving beyond its advertising business to compete directly with leading AI labs. The rapid release cadence—three major announcements in three months—signals urgency in catching up to competitors with established foundation models. The custom chip development, if successful, could significantly reduce Meta's reliance on external hardware providers and improve margins on AI infrastructure. However, Meta remains behind competitors in the foundation model race, and these releases represent catch-up moves rather than market leadership.