Meta’s bet on AI suddenly looks like a victory for Mark Zuckerberg.
It was far from certain. Even the CEO of Meta doubted him. His company had poured hundreds of billions of dollars into AI investments, with largely unproven results.
“Are you sure this will work?” he asked his AI boss, 29-year-old Alexandr Wang, late last year, he recalled in a recent episode of the “Cheeky Pint” podcast.
These risky bets on AI – which one analyst likened to throwing spaghetti at the wall – and the massive layoffs and reorganization that accompanied them, are now starting to pay off. Meta beat its AI rivals with its new AI assistant, Muse, and finally released a frontier AI model. Although Muse is bleeding money due to high computational costs, analysts are excited about its lucrative potential.
Zuckerberg is also on the rise. Sipping a Guinness alongside Wang during a recent podcast interview, the two touted Meta’s AI prowess.
“You never know when you launch something how it’s going to be received,” the CEO said. “There’s always the case where you get a home run, which was the case in this case, right? And it’s like extremely well received right off the bat.”
And Meta seems to believe in Zuckerberg’s leadership more than ever. His latest coup: convincing the company to issue a new class of shares after threatening to list its Palo Alto complex and leave California while voters weigh a billionaire tax.
The big question is how long the good vibes will last. Meta is still spending considerable sums on AI without any concrete financial gain. Some remain skeptical.
“The bill is huge,” David Wagner, portfolio manager at Aptus Capital Advisors, told Business Insider.
“He’s won the narrative. He hasn’t proven his comeback yet.”
Meta’s Age of Social Computing
Zuckerberg is no stranger to public discourse. He has adopted several personas: the nerdy wunderkind in a hoodie, the man with the jerk-off wife, the decidedly masculine Trump ally.
At the start of this year, it seemed like he was headed for a new reckoning, and it wasn’t just because of the aptly named sequel to “The Social Network.”
Zuckerberg was on trial and took the stand in a landmark trial alleging that Meta’s platforms were harming young people’s mental health. (Meta was found negligent and appealed.) It’s one of three major lawsuits this year that have put the company on the defensive over allegations that its technology posed safety risks to children.
In February, Mark Zuckerberg appeared in a Los Angeles courthouse to defend the company in a landmark social media addiction lawsuit. Jon Putman/Anadolu via Getty Images
And there were also Zuckerberg’s more typical cringe moments, like his front-row appearance at a Prada fashion show that raised eyebrows across the Internet.
Inside, employee morale was down. Even though the billionaire CEO had called 2026 the “year of AI,” Meta had little momentum, and unpopular decisions — including a program to track employee keystrokes — amplified discontent.
Additionally, Meta experienced one of the largest rounds of layoffs on record. Meta began reducing its workforce in March, followed by a broad series of measures in May, when it laid off about 10% of its workforce.
Separately, Meta reshuffled another 7,000 workers as part of an AI-driven reorganization of its technical and product teams. Many engineers have been relegated to individual contributor status. Meta then asked some of the employees she had demoted to return to their management roles.
The AI push doesn’t appear to be paying off: in the second quarter of this year, 98% of revenue came from its traditional advertising business, not AI.
Morale was “maybe not the worst it’s ever been in 20 years here, but it’s probably at its best,” Andrew “Boz” Bosworth, Meta’s chief technology officer, said on an internal call in June.
The Basics of Meta’s Return
Amid the chaos, Zuckerberg laid the groundwork for a comeback. Wang and Meta’s elite AI researchers moved their desks to sit near Zuckerberg.
Since last year, Zuckerberg and Wang have also embarked on a talent recruiting spree, dangling payouts worth hundreds of millions of dollars to poach top researchers.
Zuckerberg empowered key lieutenants, including former GitHub CEO Nat Friedman, to be wrong on any vision they had, including his pet project, an AI assistant. It’s all part of Zuckerberg’s long-standing strategy of adopting small teams and overseeing reorganizations until something works — moving fast and breaking things, as he infamously put it.
It worked.
Muse, the long-awaited Meta AI agent, has become a smash hit. A week after its launch, it rose to the top of the App Store and has since achieved over 10 million downloads in North America. The team was stunned to have beaten OpenAI to market, a person familiar with the matter said. OpenAI’s rival product, Dots, launched three weeks later.
Jolly is the mascot for Meta’s Agent Muse AI, which was successfully launched last month. Bloomberg/Getty Images
Meta has also deployed unprecedented computational capabilities and talent to create a series of cutting-edge AI models, called Muse Wonder, that could follow those of giants like OpenAI and Anthropic.
During Meta’s third-quarter earnings call, Zuckerberg was optimistic that Meta’s AI and hardware investments could soon become cash cows, as people shop through Muse and buy more virtual reality glasses powered by the company’s growing AI capabilities.
Meta, meanwhile, views Zuckerberg as more critical than ever to his long-term fortunes.
Top board members abruptly excused themselves from a dinner with Zuckerberg in September after Zuckerberg told them he would sell his Palo Alto estate in response to California’s proposed billionaires tax, Meta revealed in a filing Wednesday.
Four days later, a special committee came back with a deal that would give Zuckerberg $20 billion in “immediate liquidity” to cover the tax – if passed – without reducing his majority stake in Meta. Meta also planned to ensure that billions in new AI fundraising would not dilute Zuckerberg’s control.
“Meta’s track record of creating significant value for its shareholders is due in large part to its strong leadership, unique and creative vision and exceptional management capabilities,” the company said in a press release.
The personal victory comes as some of his other problems have disappeared. Meta settled a major lawsuit brought by the attorneys general of the states, Washington, D.C., and U.S. territories. As part of the settlement, the company agreed to make changes to its apps, such as daily time limits and suspending notifications overnight. The deal was part of an August settlement, a move that allowed Meta to call out competitors such as YouTube and TikTok.
“All platforms should empower parents and support teens by putting the same measures in place, because we know that when teens are restricted on one app, they simply move on to another,” the company said in a blog post at the time.
Big questions still arise. The day after Meta reported strong earnings and adopted Muse, its stock fell 7% as investors absorbed the scale of the company’s hundreds of billions of dollars in future spending.
And the legal troubles 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 mood has been notable — and may have proven the naysayers wrong, at least until the next period of chaos erupts.
“Meta is cool again,” Investing.com analyst Jesse Cohen said in a note. “It’s the Muse effect.”
Gn bussni
