A significant portion of the American economy is currently sustained by substantial investments in AI projects, primarily by major tech companies, which some argue is artificially inflating the economy. One notable company that has publicly announced its significant spending on AI is Meta, whose CEO made a public commitment to investing billions of dollars in AI infrastructure in front of the US President.
Despite Meta being considered one of the top hyperscalers among the “Magnificent 7” Big Tech stocks, it has recently experienced a significant decline in its stock gains for the year. The company’s Superintelligence Lab has undergone multiple costly changes following Meta’s quasi-acquisition of Scale AI in June. This involved a $14 billion investment to bring Scale’s CEO under Meta’s umbrella, along with multimillion-dollar contracts to attract top talent, including lucrative financial incentives up to $100 million per year.
Meta’s strategy appeared to focus on acquiring top talent and then figuring out the next steps later. However, challenges arose as the company struggled with its Superintelligence Lab setup. Despite efforts such as breaking the lab into separate teams and downsizing certain AI-related divisions, issues persisted.
Reports indicated that some of Meta’s key hires were dissatisfied and considering leaving, prompting the company to offer promotions to retain them. This turmoil coincided with setbacks in the development and release of Meta’s AI products like Llama 4 Behemoth and Vibes.
Meta’s attempts to leverage its massive user base have faced setbacks and criticism, such as privacy concerns over user prompts visible on Instagram and controversies surrounding chatbot interactions. These missteps have impacted user engagement levels negatively.
While Meta has heavily invested in AI infrastructure, surpassing $600 billion over the next few years, doubts remain about its ability to effectively monetize these projects compared to competitors like OpenAI. Mark Zuckerberg’s remarks about potential misspending and historical instances of failed ventures have also raised concerns among investors regarding Meta’s financial prospects moving forward.
The company’s pursuit of ventures like the metaverse and reports of revenue from advertisements for scams and banned goods have added to investor skepticism about Meta’s long-term profitability and strategic decision-making.