Key Takeaways:
Meta Platforms Inc. is spending billions on artificial intelligence dominance while employee morale sinks to levels not seen in two decades — a tension that threatens the very AI product development investors are demanding.
Meta's CTO Andrew Bosworth told employees in an internal meeting that morale is "maybe not the worst it's ever been in 20 years here, but it's probably up there," according to Business Insider. In a separate staff memo, Bosworth called the company's explanation of its AI restructuring to employees "atrocious."
The discontent comes as Meta plans to spend as much as $145 billion on AI investments this year, nearly double last year's figure. The company cut 10% of its workforce — roughly 8,000 jobs — this spring and reassigned another 7,000 employees to AI-related roles. For those who remain, an internal AI training program called the Model Capability Initiative, which captured employee clicks, keystrokes and browsing activity, sparked a revolt. More than 1,600 employees signed a petition calling for its end before Meta suspended the program June 22 after private conversations and performance data inadvertently became accessible to all staff.
The stakes for Meta extend beyond internal culture. The company needs to justify hundreds of billions in AI spending beyond advertising optimization, which accounts for nearly 98% of revenue. Meta's first-quarter net income rose to more than $26 billion, and revenue grew 33% year over year — its fastest pace since 2018 excluding pandemic-era spikes. But the stock has fallen more than 8% since the last earnings report, recently trading below $575, as investors question whether the AI spending can generate new revenue streams.
Muse Spark Shows Progress, But Gaps Remain
Meta's latest AI model, Muse Spark, scored 43 on Artificial Analysis's Intelligence Index — more than three times the 14 score of its predecessor Llama 4 Maverick. That puts it within striking distance of Alphabet Inc.'s Gemini 3.1 Pro Preview at 46, though still behind Anthropic and OpenAI's top models at 55 to 60. The improvement came roughly 10 months after Meta hired Alexandr Wang as its first chief AI officer, poaching the 28-year-old Scale AI CEO in a deal that included more than $14 billion invested in the startup.
Yet the rapid reorganization has come at a cost. Yann LeCun, the Turing Award winner who led Meta's AI research since 2013, left at the end of 2025 after finding himself reporting to Wang, more than 35 years his junior. LeCun told the Financial Times that Wang, while a fast learner, had "no experience with research" and was on a "dead-end quest." Emily Dalton Smith, tasked with improving internal AI usage among employees, left after only two months in the role following a 10-year tenure at the company.
Investor Implications
Meta shares, trading around $575 after the post-earnings slide, still carry a MarketBeat consensus price target of $840 — implying roughly 50% upside. Wall Street analysts remain broadly bullish, but the internal turmoil introduces execution risk at a critical juncture. The company must deliver new AI products beyond ad optimization to justify its $145 billion capital expenditure plan, and a workforce operating at near-historic low morale is an unlikely engine for rapid innovation. Meta's ability to retain top AI talent while pushing through its restructuring will determine whether the spending translates into products — or becomes a cautionary tale about the human cost of the AI arms race.
This article is for informational purposes only and does not constitute investment advice.
