Meta’s AI gamble is suddenly looking like a win for Mark Zuckerberg.
That was far from a given. Even the Meta CEO was doubting himself. He’d poured hundreds of billions of dollars into AI investments with largely unproven results.
“Are you sure this is going to work?” he asked his 29-year-old AI chief, Alexandr Wang, at the end of last year, he recalled on a recent episode of the “Cheeky Pint” podcast.
Those risky AI bets — which one analyst compared to throwing spaghetti at the wall — as well as the massive layoffs and reorganization that came with them, are now starting to pay off. Meta beat its AI rivals to the punch with its new AI assistant, Muse, and it finally released a frontier AI model. Although Muse is bleeding cash amid high compute costs, analysts are excited by its moneymaking potential.
Zuckerberg is riding high, too. Sipping a Guinness alongside Wang during a recent podcast interview, the pair extolled 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 in this case it was, right? And it’s just 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 he threatened to list his Palo Alto compound and leave California as voters weigh a billionaire tax.
The big question is how long the good vibes will last. Meta is still spending gobs of money on AI without a concrete financial payoff. Some remain skeptical.
“The bill is huge,” David Wagner, a portfolio manager at Aptus Capital Advisors, told Business Insider.
“He’s won the narrative. He hasn’t proven the return yet.”
Meta’s social reckoning era
Zuckerberg is no stranger to public discourse. He’s undertaken multiple personas: the nerdy wunderkind in hoodies, the jacked wife guy, the unapologetically masculine Trump ally.
At the beginning of this year, it looked as if 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, taking the stand in a landmark lawsuit that alleged Meta’s platforms harmed the mental health of young people. (Meta was found negligent and is appealing.) It was one of three major lawsuits this year that put the company on the defensive against claims that its technology posed safety risks to children.
And there were the more typical Zuckerberg cringe moments, too, like his front-row appearance at a Prada fashion show that raised eyebrows across the internet.
On the inside, employee morale was waning. 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 the discontent.
Also, Meta had one of its largest rounds of layoffs, ever. Meta began trimming staff in March, followed by a huge round in May, when it laid off about 10% of its workforce.
Separately, Meta reshuffled another 7,000 workers as part of an AI-focused reorganization of its tech and product teams. Many engineers were relegated to individual contributor status. Meta later asked some of the employees it had demoted to return to their managerial roles.
The AI push didn’t seem 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 up there,” Meta’s chief technology officer, Andrew “Boz” Bosworth, said during an internal call in June.
The groundwork for Meta’s comeback
Amid the chaos, Zuckerberg laid the groundwork for a comeback. Wang and Meta’s elite AI researchers moved their desks to sit near Zuckerberg.
Starting last year, Zuckerberg and Wang also went on a talent-hiring spree, dangling pay packages worth hundreds of millions of dollars to poach top researchers.
Zuckerberg empowered key lieutenants, including former GitHub CEO Nat Friedman, to go ham on any vision they had, including on his pet project, an AI assistant. It all fit into Zuckerberg’s longtime playbook of embracing small teams and overseeing reorgs until something works — move fast and break things, as he has infamously put it.
It worked.
Muse, the long-awaited Meta AI agent, became a breakout hit. A week after it launched, it shot to the top of the app store, and has since achieved more than 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.
Meta also threw unprecedented compute and talent at building a series of frontier AI models, called Muse Wonder, that could keep up with those from giants like OpenAI and Anthropic.
On 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 chops.
Meta, meanwhile, views Zuckerberg as more critical than ever to its long-term fortunes.
Key board members abruptly excused themselves from a dinner with Zuckerberg in September after he told them he was going to sell his Palo Alto estate in response to California’s proposed billionaire tax, Meta disclosed in a filing on Wednesday.
Four days later, a special committee returned with a deal that would give Zuckerberg $20 billion in “immediate liquidity” to cover the tax — if it passes — without reducing his controlling stake in Meta. Meta also made plans to ensure that billions in fresh AI fundraising wouldn’t dilute Zuckerberg’s control.
“Meta’s track record of significant value creation for its shareholders is in large part due to his strong leadership, unique and creative vision, and exceptional management abilities,” the company said in a press release.
The personal win comes as some of his other problems have blown over. Meta settled a major lawsuit brought by attorneys general across states, Washington, DC, and US territories. As part of the settlement, the company committed to make changes to its apps, such as daily time limits and pausing notifications overnight. The agreement was part of an August settlement, a move that allowed Meta to call out its 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 to another,” the company said in a blog post at the time.
Big questions still loom. The day after Meta reported strong earnings and Muse adoption, its stock fell 7% as investors absorbed the scale of the company’s hundreds of billions of dollars in future spending commitments.
And the legal troubles keep on coming. This week, a New Mexico jury also ordered Meta to pay a staggering $25 billion over the Cambridge Analytica scandal, a case that Meta plans to appeal.
Whether Zuckerberg’s strategy is sustainable or not, the vibe shift has been notable — and may have proven 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. “That’s the Muse effect.”
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