Meta stock rockets 9% after unveiling new AI model 'Muse Spark'

Meta Platforms shares surged around 9% on Wednesday, marking their sharpest gain since January, as markets rallied on easing geopolitical tensions.

The S&P 500 climbed 2.6%, while the Dow Jones Industrial Average rose 1,384 points, or 2.9%. The Nasdaq Composite advanced 3.3%.

The gains followed comments from Donald Trump, who said he would suspend military action against Iran for two weeks.

“I agree to suspend the bombing and attack of Iran for a period of two weeks,” he said, adding that a ceasefire would depend on reopening the Strait of Hormuz.

The announcement also pushed oil prices sharply lower, improving risk sentiment across equity markets.

Meta unveils new AI model

The massive rally was supported by Meta's announcement of a new artificial intelligence model, Muse Spark.

The launch marked Meta's first major release since hiring Alexandr Wang and investing $14.3 billion in Scale AI.

Muse Spark, previously codenamed Avocado, is the first model in Meta’s new Muse series developed by its Meta Superintelligence Labs unit.

“Over the last nine months, Meta Superintelligence Labs rebuilt our AI stack from the ground up, moving faster than any development cycle we have run before,” the company said in a blog post.

“This initial model is small and fast by design, yet capable enough to reason through complex questions in science, math, and health. It is a powerful foundation, and the next generation is already in development.”

Strategy focuses on efficiency over scale

Meta is positioning Muse Spark as an efficient model rather than a top-tier competitor.

The company highlighted its ability to deliver “competitive performance” while using significantly less compute than earlier models.

According to Meta, improvements in training techniques and infrastructure have enabled the development of smaller models that match the capabilities of its previous midsize Llama 4 variant at a fraction of the computational cost.

“Muse Spark offers competitive performance in multimodal perception, reasoning, health, and agentic tasks,” the company said, adding that it continues to invest in areas such as long-horizon agentic systems and coding workflows.

The model will be proprietary, though Meta said it hopes to open-source future versions.

This marks a shift from its earlier strategy centred on open-source models like its Llama series.

Competitive pressure in AI intensifies

Meta’s latest move comes as it seeks to regain momentum in the fast-growing AI market.

The company’s earlier open-source releases failed to gain strong traction among developers, prompting CEO Mark Zuckerberg to adjust strategy.

Competition remains intense. OpenAI, Anthropic, and Google have established strong positions, with their models gaining widespread adoption.

The broader generative AI market is expected to grow rapidly, rising from about $22 billion in 2025 to nearly $325 billion by 2033, according to industry estimates.

Meta is also significantly increasing investment to support its AI ambitions.

The company expects AI-related capital expenditure in 2026 to range between $115 billion and $135 billion, nearly double the prior year.

The spending reflects a broader effort by large technology companies to scale infrastructure and compete in AI development.

While Meta has successfully used AI to enhance its advertising business and internal efficiencies, it has yet to establish a dominant position in the AI model market.

The launch of Muse Spark signals a renewed push to close that gap, even as competition intensifies and investment requirements continue to rise.