Meta Platforms Inc. (META  ) unveiled an artificial intelligence (AI) tool within Facebook Search on Monday, which could potentially rake in billions in yearly revenue, according to an analyst. The new feature, dubbed "AI Mode," uses Meta's AI to answer search queries with results from public content in Groups and Reels, instead of providing a generic list of search results. The AI Mode is powered by Muse Spark, an AI model that Meta introduced in April, and the first significant model developed by Meta Superintelligence Labs, led by ex-Scale AI CEO Alexandr Wang.

The launch also introduced AI-powered photo and video editing tools, including collage cutout templates, video transitions, and presets that let users change their clothing, hairstyle, and accessories in photos.

Meta Challenges Google's Dominance

Meta has integrated its Meta AI assistant across Facebook, Instagram, WhatsApp and Messenger for years, but Monday's launch marks the first time the company has turned AI into a direct replacement for Facebook's search bar, positioning itself more directly against Alphabet Inc.'s (GOOGL  ) (GOOG  ) Google in the search market.

Meta was reported in October 2024 to be developing its own AI-powered search engine that crawls the web and delivers answers directly to users through the Meta AI chatbot.

According to Morgan Stanley analyst Brian Nowak, if the tool attracts 1 billion users, roughly one-third of Facebook's global monthly active user base, and Meta monetizes just 10% of daily searches, it could bring in more than $10 billion in annual revenue, reported Forbes.

Muse Spark Powers AI Search

The AI Mode is a product of Muse Spark, an AI model that Meta introduced in April. Muse Spark was the first significant model developed by Meta Superintelligence Labs. Meta is positioning the model as an efficient, competitively performing AI model rather than a flagship offering, citing strengths in multimodal reasoning, perception, health, and agentic tasks.

The company plans to open-source future versions and generate revenue by offering developers API access to the model, which currently powers the Meta AI assistant across its app and desktop platform.

However, the rapid development of AI at Meta has not been without challenges. Just days before the launch of AI Mode, CEO Mark Zuckerberg reportedly admitted in an internal memo that the company had made mistakes in its AI restructuring push. Despite these challenges, the company remains committed to advancing its AI capabilities.

Despite heavy AI spending weighing on investor sentiment, analyst Mark Nowak believes Meta's new AI search tool could help boost confidence in the company.

Meta holds a quality rating of 85.51% and a growth rating of 88.67%, according to Benzinga's Proprietary Edge Rankings. The Benzinga Growth metric evaluates a stock's historical earnings and revenue expansion across multiple timeframes, prioritizing both long-term trends and recent performance.

META Price Action: On a year-to-date basis, Meta stock declined 8.75%, as per data from Benzinga Pro. On Monday, it climbed 4.77% to close at $593.48.