There appears to be a variety of opinions on what Lou Reed's intentions were when he released Metal Machine Music. First up, from Reed's liner notes to the album:

I would record tracks of guitars, at different speeds, playing with the reverb, tuning the guitars in unusual ways. I would tune all the strings, say to E, put the guitar a certain distance from the amp, and it would start feeding back. The harmonics would start mixing, going into something else. It was as if the guitar was hitting itself...This is what I meant by ‘real’ rock, about ‘real’ things. No one I know has listened to it all the way through including myself. It is not meant to be. Start any place you like. Symmetry, mathematical precision, obsessive and detailed accuracy and the vast advantage one has over ‘modern electronic composers’. They, with neither sense of time, melody or emotion, manipulated or no. It’s for a certain time and place of mind. It is the only recorded work I know of seriously done as well as possible as a gift, if one could call it that, from a part of certain head, to a few others. Most of you won’t like this, and I don’t blame you at all. It’s not meant for you. At the very least I made it so I had something to listen to. Certainly Misunderstood; Power to Consume (how Bathetic); an idea done respectfully, intelligently, sympathetically and graciously, always with concentration on the first and foremost goal. For that matter, off the record, I love and adore it. I’m sorry, but not especially, if it turns you off. One record for us and it. I’d harbored hope that the intelligence that once inhabited novels or films would ingest rock. I was, perhaps, wrong. This is the reason Sally Can’t Dance—your Rock n Roll Animal. More than a decent try, but hard for us to do badly. Wrong media, unquestionably. This is not meant for the market.

Reed is,here, presenting the album as a challenge to the listener - 'It's not meant for you...this is not meant for the market' - and is self-consciously comparing himself to 'modern electronic composers'; Reed in the 1970s was not referring to, say, Mike Oldfield or Jean-Michel Jarre by this reference, but was instead referring to 'electronic' in the sense that referred to musique concrete and associated experimental sonic artforms. In a few ways, Metal Machine Music comes from the same mindset as Steve Reich's 1969 experimental art piece Pendulum Music, which is very squarely in the tradition of 'modern electronic composers' Reed mentions.

But, regardless of Lou Reed's justifications for it at the time, later Lou Reed (and associates) didn't always stick to the script. Howard Sounes' book Notes From The Velvet Underground: The Life Of Lou Reed, ultimately, describes some very obviously conflicted feelings about the album.

Over the years, he spoke about this infamous work in conflicting terms, defending Metal Machine Music as a conceptual piece in the tradition of La Monte Young; other times stating that it was a joke; also admitting that drugs were a factor. ‘I was serious about it,’ he once said. ‘I was also really stoned.’

His manager didn’t take it seriously. ‘I thought it was a joke, and so did Lou when he made it,’ scoffs Dennis Katz. ‘He liked playing mind games.’

Metal Machine Music is perhaps best described as an artistic tantrum. Lou was prone to such behaviour. ‘One of the things he would do, he would just blow up his career for a while,’ observes musician friend Scott Kempner. ‘How he had the courage to do that, I couldn’t tell you.’

Aidan Levy in Dirty Blvd. is much more charitable about Reed's artistic motives than Sounes, placing it as a reaction to the tradition of experimental music composers like Steve Reich:

Leveraging the Billboard capital he had accrued on the charts, he planned to make an artistic statement more in tune with his anarchist ideals, a wordless avant-garde manifesto so unlistenable, uncommercial, and unintelligible it would be sure to piss everyone off. Inspired by La Monte Young’s Dream Syndicate, which he explicitly mentioned in the stream-of-consciousness liner notes that diagonally bisected the gatefold sleeve in typewriter font, Lou harnessed the power of the drone. Through its concentrated, piercing sameness, drone forced listeners to pay attention to the infinite difference of the sound; what was chaotic, unfixed, and always changing in tonality. Pop was ordered and mollifying; drone was disordered and disturbing. But that was the point. Instead of giving them the world as it ought to be, Lou wanted to give them the world as it was; “passion—REALISM—realism was the key,” he wrote. “‘Real’ rock, about ‘real’ things.” It was a wall-of-sound realism that stripped off the wallpaper and the plaster to expose the brick foundation underneath.

Unlike pop, which recycled the same tropes in a new package just different enough to sell, avant-garde noise music used repetition as a weapon against the repetitiveness of the mainstream culture machine. For Lou, who had just felt the residual effects of becoming a cog in that machine, feedback loops served as an extended metaphor for the way pop replicates itself as a kind of humdrum hall of mirrors. So, with Tony Conrad’s experimental film The Flicker in mind, he devised Metal Machine Music, the perfect sonic Master Cleanse for a guy who refused to sell out, and with the intent of creating rock Stockhausen, sequestered himself in his apartment and started to purge—just a man and his amps pounding away at 5 AM in the garment district.

I'm ultimately sympathetic to placing Metal Machine Music within the portrait of Lou Reed's personality painted within the indie musician Ezra Furman's recent 33 1/3 book about the earlier Lou Reed album Transformer. Furman paints the formative event in Lou Reed's life, in a lot of ways, as his receiving electroshock therapy in the early 1960s in an attempt to cure his homosexuality. Reed had gone to university to study creative writing, with the intent of becoming a writer, but the electroshock therapy seems to have altered Reed's brain enough that he had trouble concentrating for the long periods needed to actually, you know, write the books he wanted to write.

Additionally, the 1960s was not a pleasant time to be...wherever on the LGBT+ spectrum Lou Reed actually was, as evidenced by Reed undergoing electroshock therapy to try and treat it. The long and the short of it, as Furman argues, is that Lou Reed was almost compulsively torn between the part of himself who wanted to be part of normal society, and the part of him who could never be part of normal society, and that this torn-ness was behind many of his odder artistic choices, like Metal Machine Music. Lou Reed, argues Furman, was desperate to be an incredibly successful rock star, like David Bowie (who initially hero-worshipped Lou Reed and painted himself in Lou Reed's image in many ways before becoming an enormously successful rock star). But part of Lou Reed also hated the idea of being an incredibly successful rock star, as a betrayal of who he actually was. And so Lou Reed, again and again, sabotaged his chances of being what he actually desperately wanted to be.

And so, both interpretations - Metal Machine Music as serious art project, or as joke - are simultaneously right, I think. Normal heterosexual rock star Lou Reed saw it as a joke, a provocation to the record company and the audience. Weirdo art world Lou Reed - the one who lived in New York art music underground circles where being Lou Reed was accepted - took it very seriously.