Meta’s AI-Powered Facebook Search Feature Poised to Generate Over $10 Billion Annually, Analyst Projects

Meta unveiled a suite of artificial intelligence-driven features on Monday, including an AI-powered search tool within Facebook that could potentially generate over $10 billion in annual revenue, according to Morgan Stanley analyst Brian Nowak. The new capabilities position Facebook as both a search engine and content generation platform.

Meta launched “AI Mode” within Facebook Search, which uses artificial intelligence to answer user queries and return responses drawn from public content across Groups and Reels, rather than displaying a generic list of search results, the company said.

The search functionality is powered by Muse Spark, Meta’s new AI model developed by Meta Superintelligence Labs, which was publicly introduced in April. Muse Spark represents Meta’s first major AI model from its Superintelligence Labs division, led by former Scale AI CEO Alexandr Wang.

According to Nowak, if the tool attracts and retains 1 billion users—approximately one-third of Facebook’s global monthly active users—and monetizes just 10% of daily queries, it could generate more than $10 billion in annual revenue for Meta.

The update also introduces AI-assisted photo and video editing tools, including collage templates, video transition effects, and photo presets that allow users to modify clothing, hair, and accessories in their pictures.

Following the announcement, Meta shares rose nearly 5% to $595 in afternoon trading, though the stock remains down approximately 8% year-to-date.

What Remains Uncertain

One key question is how Meta’s AI Mode sources its search results. While the company states it will “provide answers grounded in what people are saying publicly across our apps like Groups and Reels,” it has not disclosed how its algorithm evaluates sources or addresses misinformation—a persistent challenge for Facebook.

Background Context

Meta has integrated its Meta AI assistant across Facebook, Instagram, WhatsApp, and Messenger over several years. However, Monday’s launch marks the first time AI is positioned as a direct replacement for Facebook’s traditional search function, increasing competition with Google.

The initiative follows reports from October 2024 that Meta was developing its own search engine. This represents the first public exposure to that work for average Facebook users.

In the broader AI landscape, Meta trails competitors after the limited release of its Llama 4 AI models, prompting a shift away from open-source strategies. Instead, the company invested $14.3 billion in Scale AI—including bringing on Wang—and launched Muse Spark, a proprietary AI system distinct from its previous open approaches.

Despite enormous AI investments, investor confidence has lagged. However, Nowak believes the new AI search feature could improve market sentiment.

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