Meta open-sources Muse Glimmer, keeps Muse Spark 1.2 closed

Meta's decision to open-source a less powerful model while keeping its flagship closed suggests a careful balance between transparency and competitive advantage. The company's core monetization is not through selling AI models, but through enhancing its ad and recommendation systems on Facebook and Instagram. Early results are encouraging, with AI improvements leading to an 8.3% increase in ad clicks and a 15.7% rise in ad conversions in Q2. This strategy could justify heavy spending on AI infrastructure, but the company's capital expenditures are rising sharply, with 2026 expectations now at $130 billion to $145 billion. Depreciation is also climbing, up 40% year over year, which could pressure future margins. Meta's valuation appears reasonable at around 16.8 times expected 2027 earnings, but the company faces the challenge of ensuring that AI investments continue to lift revenue per user, especially in lower-monetization markets like Asia-Pacific, where much of its ad growth is coming from. If spending remains high without corresponding revenue gains, the stock may struggle.