Meta’s Bold Superintelligence Gamble Faces Profit Pressure Amid AI Spending Surge

Meta Platforms is facing heightened scrutiny as CEO Mark Zuckerberg doubles down on a high-risk, high-cost bet to lead the race toward artificial general intelligence—what he refers to as “superintelligence.” This includes heavy investments in AI infrastructure, talent acquisition, and open-source models, all while profits and revenue growth slow. Analysts expect Meta’s Q2 profit to rise just 11.5%—its slowest growth in two years—amid a 9% jump in operating costs. Revenue is also expected to show its weakest performance in nearly two years.

The company has significantly ramped up spending, including a $14.3 billion stake in startup Scale AI and the formation of a new Superintelligence Lab. Meta’s ambitious plans come at a time when its latest large language model, Llama 4, has underperformed expectations, raising doubts about the immediate returns of these investments. Despite continued layoffs, Meta has aggressively recruited talent, including poaching top researchers from OpenAI, contributing to a broader AI talent war in Silicon Valley.

Meta’s investors have so far remained supportive, with its stock up over 20% this year. However, comparisons with rivals like Alphabet, which also increased its AI investment budget to $85 billion, show that Meta is playing catch-up in some areas. Zuckerberg’s open-source strategy and consumer-oriented vision—via products like Ray-Ban smartglasses—are designed to differentiate Meta’s AI efforts from enterprise-focused peers.

Nevertheless, Meta’s dominance in the digital ad market is facing new threats. President Trump’s tariffs have caused advertisers to pull back spending, while TikTok remains a fierce competitor, particularly as a potential U.S. ban now appears unlikely. Some advertisers may seek stability by sticking with Meta, but analysts question how its AI-first vision will integrate with its core business model.

Long-term uncertainty clouds the timeline for achieving superintelligence, and even within Meta, there’s skepticism. AI chief Yann LeCun remains doubtful of large language models as the primary path forward. Analysts suggest Meta’s strategy appears more focused than last year, but there’s still a prevailing sense of strategic drift. As Zuckerberg wagers billions on a bold AI future, the tech giant’s short-term returns remain underwhelming, raising concerns about sustainability and strategic clarity.

Source: Reuters