Meta (META) Plans a 20% Cut of Workforce as AI Investments Accelerate

A Reuters report says Meta Platforms META -3.83% ▼ may plan to cut up to 20% of its staff as the firm shifts more cash to AI buildout. The plan is not final, and no date has been set.

Claim 70% Off TipRanks Premium

• Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions

• Stay ahead of the market with the latest news and analysis and maximize your portfolio’s potential

Meta had close to 79,000 staff at the end of last year. If the firm chose the full plan, the cuts could affect about 15,000 to 16,000 jobs. That would mark the firm’s widest layoff move since the cuts in 2022 and 2023.

Still, a Meta spokesman said the report may not yet show firm plans. “This is speculative reporting about theoretical approaches,” the spokesman said. Yet the news still draws focus from Wall Street since it ties to Meta’s large push in AI.

Meanwhile, META shares dropped 3.83% on Friday, closing at $613.71.

AI Spend and Cost Control

First, Meta has made clear that AI sits at the core of its long-term plan. Chief Executive Mark Zuckerberg has said the firm now sees ways to do more work with far fewer staff.

In fact, he said in Jan that he was seeing “projects that used to require big teams now be accomplished by a single very talented person.” That view fits a wider shift in tech. Firms now lean more on AI tools to write code, run tests, and help build new apps.

At the same time, Meta plans to pour large sums into AI gear and data hubs. Reuters said the firm may spend up to $600 billion on the data hub build-out by 2028. In turn, META has also paid rich sums to draw top AI staff to a new team that aims to build stronger AI models.

Meta’s costs show a clear shift toward AI. Research and development spending has climbed quickly, while sales, marketing, and administrative costs have grown more slowly as the firm focuses on AI build and data center scale.

AI Race Heats Up

Next, Meta’s push comes as the race for top AI tools grows fiercer. Firms like Alphabet GOOGL -0.42% ▼ , Microsoft MSFT -1.57% ▼ , and Nvidia NVDA -1.58% ▼ all play key roles in that race.

Meta has made its Llama AI models open for wide use. Yet the firm has also faced some slow gains in recent tests of new AI tools. For that reason, the firm now seeks to speed up its AI work while still keeping costs in check.

For investors, the key point may be the shift in how tech firms spend cash. More funds now go to chips, data hubs, and AI tools, while less goes to large staff teams.

As a result, job cuts may indicate cost strain, but also signal a new way of working in tech as AI takes on more tasks once handled by large teams.

Is Meta Stock a Buy or Sell Right Now?

On the Street, Meta Platforms has a Strong Buy consensus view, based on 44 analysts’ ratings. The average META stock price target is $858.86, implying a 39.95% upside from the current price.

Disclaimer & DisclosureReport an Issue