If Meta Platforms intends to raise capital by issuing additional equity, now is the ideal moment.

Meta's stock has been surging recently, climbing 27% since the company launched its Muse personal AI agent on September 8. Year to date, Meta shares have gained 18%, outpacing Alphabet, Amazon and Microsoft.

Not long ago, Meta was shunned by Wall Street over seemingly runaway AI spending, but the situation has now completely reversed.

The reason investors are warming to Meta again is not hard to understand: the company marketed Muse extremely successfully, generating a wave of positive reviews and frequent headlines about app downloads. At Wednesday's Connect developer conference, Meta CEO Mark Zuckerberg unveiled multiple virtual reality and AI hardware products, including the Charm device built specifically for Muse, further fueling market optimism.

But we should not overinterpret the current situation. In the AI race, no company can stay on top indefinitely.

Remember when OpenAI released ChatGPT and Google was briefly thrown on the back foot, with many voices predicting doom for the tech giant, only for Google's Gemini model to catch up later. When Gemini first arrived, it was seen as the hot new model. But Google's AI moment was equally fleeting. As Gemini's performance appeared to falter, some argued Google had even dropped out of the frontier AI race.

Meta has experienced similar ups and downs. In late 2023, Meta released the Llama 2 large model, and many believed it was capturing market share from OpenAI's GPT series. When Llama 3 arrived in early 2024, the market response was equally enthusiastic. Yet by 2025, dragged down by a series of problems with Llama 4, Meta's industry reputation plummeted.

The current market frenzy around Meta is somewhat irrational. A Bloomberg Opinion column on Thursday argued that the new Charm device could be Meta's "iPod moment." Where does that comparison come from? The iPod was a groundbreaking music player that met a real need everyone had. Charm merely offers users one more way to interact with an AI agent, when they can already use Muse through their phones and Meta AI glasses. Who would buy a standalone device just to talk to Muse? Charm is likely to soon be mocked as "Charmless."

Whether Muse can sustain its popularity is also a huge question mark. We previously reported that over 500,000 users tried Muse within a week of launch — a striking opening figure. But how many active users will remain after a month, or six months? Consumers are broadly resistant to AI right now, so there is every reason to be skeptical about Muse's long-term prospects.

Even if Muse stays popular, will it make or lose money for Meta? Don't forget, the agent is completely free to use within a limited quota. A Rosenblatt Securities report on Thursday estimated that for Muse to become profitable, either "computing costs must fall dramatically" or the average user would need to spend more than $1,000 per month through Muse — far above current average e-commerce spending and well beyond users' monthly outlays on Amazon. (Meta plans to take a commission on transactions facilitated by Muse.)

Taking all this together, Meta's current stock rally will not last. If Zuckerberg is wise, he should push Meta to issue billions of dollars in additional stock to raise the cash urgently needed for its costly AI expansion.