Meta’s AI gamble suddenly looks like a win for Mark Zuckerberg.
That is far from a given. Even Meta’s CEO was hesitant. They have poured hundreds of billions of dollars into AI investments with unproven results.
“Are you sure this will work?” asked the 29-year-old AI chief, Alexandr Wang, at the end of last year, which he recalled in a recent episode of the “Cheeky Pint” podcast.
The risky AI bet – which one analyst compared to throwing spaghetti on the wall – as well as the massive layoffs and reorganization that came with them, is now starting to pay. Meta beat its AI competitors with its new AI assistant, Muse, and finally released its frontier AI model. Even though Muse is bleeding cash amid high computing costs, analysts are happy that it’s making money.
Zuckerberg is also riding high. Sipping Guinness alongside Wang during a recent podcast interview, the pair praised Meta’s AI prowess.
“You don’t know when you start what you’re going to get,” the CEO said. “There always is when you get a home run, which in this case, isn’t it? And it’s just as well received right off the bat.”
And Meta seems to trust Zuckerberg’s leadership more than ever. The latest coup: Convinced the company to issue a new class of shares after he threatened to delist the Palo Alto compound and leave California as voters consider a billionaire tax.
The big question is how long the good vibes will last. The meta is still spending money on AI without concrete financial payoff. Some remain skeptical.
“The bill is huge,” David Wagner, a portfolio manager at Aptus Capital Advisors, told Business Insider.
“He’s winning the narrative. He hasn’t proven his return.”
Era of social calculation Meta
Zuckerberg is no stranger to public discourse. He has taken on many personas: the nerdy wunderkind in hoodies, the jacked-up wife, the unapologetically masculine Trump ally.
At the beginning of this year, it seemed as if it was going to score something new, and not just because of the sequel “The Social Network.”
Zuckerberg is on trial, taking the stand in a landmark lawsuit alleging the Meta platform is harming young people’s mental health. (When found careless and attracted attention.) It is one of three major lawsuits this year that puts the company in defense against claims that technology poses a safety risk to children.
In February, Mark Zuckerberg appeared in a Los Angeles court to defend the company in a landmark social media addiction trial. Jon Putman / Anadolu via Getty Images
And there have also been some of Zuckerberg’s more typical moments, such as his front-row appearance at the Prada fashion show that raised eyebrows on the internet.
Internally, employee morale is waning. Although the billionaire CEO called 2026 “the year of AI,” Meta lacked momentum, and unpopular decisions — including a program to track employee keystrokes — fueled discontent.
Also, Meta had one of the biggest rounds of layoffs, ever. Meta began trimming staff in March, followed by a huge round in May, when layoffs accounted for 10% of the workforce.
Separately, Meta is laying off another 7,000 employees as part of a reorganization of its AI-focused technology and product teams. Many engineers are relegated to individual contributor status. Meta then asked some of the demoted employees to return to managerial roles.
The AI push doesn’t seem to be paying off: In the second quarter of this year, 98% of revenue came from the traditional ad business — not AI.
Morale “Maybe not the worst it’s been in 20 years here, but maybe up there,” Meta’s chief technology officer, Andrew “Boz” Bosworth, said during an internal call in June.
The foundation for Meta’s comeback
Amid the chaos, Zuckerberg laid the groundwork for a comeback. Elite AI researchers Wang and Meta moved tables to sit near Zuckerberg.
Starting last year, Zuckerberg and Wang also went on a hiring spree, dangling pay packages worth hundreds of millions of dollars to find top researchers.
Zuckerberg empowered key lieutenants, including former GitHub CEO Nat Friedman, to see anything, including his pet project, an AI assistant. It all fits Zuckerberg’s long-standing playbook of embracing small teams and overseeing reorganizations until something works — move fast and break things, as he has said.
It works.
Muse, the long-awaited Meta AI agent, is a breakout hit. A week after it was launched, it was taken to the top of the app store, and began to reach more than 10 million downloads in North America. The team was surprised to beat OpenAI to market, people familiar with the matter said. OpenAI’s competing product, Dots, launched three weeks later.
Jolly is the mascot for the Meta Muse AI agent, which was successfully launched last month. Bloomberg/Getty Images
Meta is also spending unprecedented computing and talent to build a series of frontier AI models, called Muse Wonder, that can keep pace with giants like OpenAI and Anthropic.
In Meta’s third-quarter earnings call, Zuckerberg was optimistic that Meta’s AI and hardware investments could quickly become a cash cow, as people shopped through Muse and bought more virtual-reality glasses powered by a growing number of AI companies.
Meta, meanwhile, sees Zuckerberg as more critical than ever to his long-term fortunes.
A key board member abruptly recused himself from a dinner with Zuckerberg in September after he said he planned to sell his Palo Alto estate in response to a proposed California billionaires tax, Meta disclosed in a filing Wednesday.
Four days later, the special committee returned with a deal that would give Zuckerberg $20 billion in “direct liquidity” to cover the tax – if it passes – without reducing his controlling stake in Meta. Meta is also making plans to ensure that billions in fresh AI fundraising won’t dilute Zuckerberg’s control.
“Meta’s track record of creating significant value for shareholders is largely due to its strong leadership, unique and creative vision, and exceptional management capabilities,” the company said in a press release.
The personal victory came as several other problems were resolved. Meta settled major lawsuits brought by attorneys general in states, Washington, DC, and US territories. As part of the settlement, the company committed to making changes to the app, such as daily time limits and pausing notifications overnight. The agreement was part of the August settlement, a move that allowed Meta to call out competitors such as YouTube and TikTok.
“All platforms must empower parents and support teenagers by implementing the same measures, because we know that if teenagers are limited to one application, they will simply move to another,” the company said in a blog post at the time.
The big question remains. The day after Meta reported strong earnings and adoption of Muse, its stock fell 7% as investors soaked up the size of the company’s hundreds of billions of dollars in future spending commitments.
And the legal problems keep coming. This week, a New Mexico jury also ordered Meta to pay a staggering $25 billion over the Cambridge Analytica scandal, a case Meta plans to appeal.
Whether Zuckerberg’s strategy is sustainable or not, the change in vibe has been noted – and may prove the naysayers wrong, at least until the next period of chaos erupts.
“Meta is cool again,” Jesse Cohen, an analyst at Investing.com, said in a note. “It’s the Muse effect.”