Meta’s Zuckerberg has to win AI after billions spent on ‘dream crew’

When Mark Zuckerberg feels the heat, he opens his wallet.

The 41-year-old Facebook founder and Meta CEO is on a spending spree like never before in an effort to position his company at the forefront of the artificial intelligence boom and make up for recent costly mistakes in a market that’s rapidly revolutionizing the business world.

Following last week’s stunning $14.3 billion investment in Scale AI, which brought with it Meta’s hiring of the startup’s founder, Alexandr Wang, and a small group of his top staffers, Meta now plans to hire former GitHub CEO Nat Friedman and his business partner, Daniel Gross, who had been CEO of $32 billion AI startup Safe Superintelligence, CNBC reported this week.

Meta previously tried to buy Safe Superintelligence, which was launched a year ago by OpenAI co-founder Ilya Sutskever, sources told CNBC. According to other sources, Meta had previously been in talks to buy Perplexity AI, which was valued at $14 billion in a funding round in May. The people who spoke to CNBC about the various dealmaking pursuits asked not to be named due to confidentiality.

Zuckerberg told investors at the top of the most recent earnings call in April, “The major theme right now, of course, is how AI is transforming everything we do.” At the same time, Meta upped its capital expenditures range for the year to between $64 billion and $72 billion from between $60 billion and $65 billion to reflect more data center investments in AI and potentially higher hardware costs.

What Zuckerberg didn’t say then is that he was about to start shelling out mounds of cash to revamp his AI organization.

“Mark Zuckerberg is in founder mode and he’s not going to be stopped,” said Gil Luria, an analyst at D.A. Davidson, in an interview on Friday with CNBC’s “Money Movers.” Luria has a buy rating on the stock, but said that to win in AI, Meta needs to be successful with the next round, with the dream team that they’re building.”

At Meta, AI is being embedded across the company, from its core online advertising unit and Instagram algorithms to its effort to build the metaverse. Better AI models and technology enhance the company’s existing business, both by improving ad targeting and by bringing down costs.

However, the building of fundamental models used by the vast community of developers — where the company competes with Google, OpenAI, Anthropic and others — is where Meta is viewed by many as a laggard.

Meta’s unique open-source approach is built around the Llama family of models. Its most recent update in April, the Llama 4 AI models, was not well received by developers. At the time, Meta only released two smaller versions of Llama 4 and said it would eventually release a bigger and more powerful “Behemoth” model. 

“On the heels of a successful rollout of Llama 3 a year ago, Llama 4 that came out this year was an absolute failure, almost by his admission,” Luria said, referring to Zuckerberg. “Meta can’t afford to fail in having the leading AI model. So they’re out in the marketplace desperately trying to replace their AI team right now.”

Meta didn’t respond to a request for comment for this story.

Zuckerberg then turned his attention to Github’s Friedman and Gross, who have been investing together at their venture firm NFDG. They will work on products under Wang, one source familiar with the matter told CNBC on Thursday. Meta, meanwhile, will get a stake in NFDG, according to multiple sources.

A Meta spokesperson didn’t comment on the planned hires and said the company “will share more about our superintelligence effort and the great people joining this team in the coming weeks.”

Not all of Zuckerberg’s recruits are costing billions of dollars. Some are in the tens or hundreds of millions. That’s according to OpenAI CEO Sam Altman.

Altman said on the latest episode of the “Uncapped” podcast, which his brother hosts, that Meta has tried to lure OpenAI employees by offering signing bonuses as high as $100 million, with even larger annual compensation packages.

“I’ve heard that Meta thinks of us as their biggest competitor,” Altman said on the podcast. “Their current AI efforts have not worked as well as they have hoped and I respect being aggressive and continuing to try new things.”

Meta technology chief Andrew Bosworth told CNBC’s “Closing Bell Overtime” on Friday that Altman is countering the offers.

“The market is setting a rate here for a level of talent which is really incredible and kind of unprecedented in my 20-year career as a technology executive,” said Bosworth, who joined Meta in 2006.

Wall Street is mostly giving Zuckerberg the benefit of the doubt, for now. Meta shares were flat this week after slipping about 2% last week. Shares are still up 17% for the year, outpacing the Nasdaq and all the company’s megacap peers.

Analysts at Argus maintained their buy recommendation on the stock this week and lifted their price target to $790 a share from $725 a share. The stock closed on Friday at $682.35.

“The company’s ability to capitalize on GenAI advances in advertising targeting is a particularly relevant opportunity to drive advertising spending, which is the company’s lifeblood,” the Argus analysts wrote.

D.A. Davidson’s Luria said that Zuckerberg has put more pressure on himself to turn Meta into a long-term AI leader, but said he won’t bet against him.

Luria said: “The last time Mr. Zuckerberg felt like he was under the gun,” he snapped up Instagram for $1 billion, a deal that set the stage for Facebook to become a dominant player in mobile.

That was in 2012, just as Facebook was about to hit the public market. Luria also highlighted Zuckerberg’s controversial $19 billion purchase of WhatsApp two years later. He sees the Meta CEO making an equally bold wager in AI.

“He’s going to rebuild the team and they’re going to come back,” Luria said.

— CNBC’s Kate Rooney and Jonathan Vanian contributed to this report.

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