Facebook parent Meta Platforms has finalized an investment in Scale AI that values the startup at $29 billion and will have its leader join Meta. Meta stock was slightly lower Friday.
Meta is investing $14.9 billion total for a 49% stake in the startup, according to several reports. Scale AI provides data labeling services that help train and produce AI large language models. As part of the deal, Scale AI Chief Executive Alexandr Wang will join a new AI research lab at Meta dedicated to pursuing "superintelligence," according to a New York Times report. Meta's interest in Scale AI was first reported by Bloomberg earlier this week.
Chief Executive Mark Zuckerberg is reportedly reorganizing Meta's AI efforts after some recent setbacks. The social media giant delayed the rollout of its "Behemoth" Llama AI model, according to a Wall Street Journal report last month.
Wang will continue to serve on Scale AI's board of directors. The startup's Chief Strategy Officer Jason Droege will serve as interim chief executive.
On the stock market today, Meta stock is down a fraction at 692.91.
Meta's Llama AI Models
Scale AI provides data labeling services for companies like Microsoft and OpenAI, helping to enable the training and production of large language models. Meta had already worked with Scale AI to help train its Llama large language models, as well as to develop a "Defense Llama" AI model focused on U.S. national security.
The Scale AI investment is part of a broader AI spending offensive from Meta. In late April, CEO Zuckerberg told investors that the company planned to spend about $68 billion in capital expenditures this year. That's up from $39.2 billion in 2024. The investment is focused on developing AI infrastructure, such as data centers with advanced processors from Nvidia.
The data centers power Meta's Llama AI models, which it is publishing for developers to essentially freely use as open-source code. Zuckerberg is betting that Meta's business will see significant benefits if its models become the go-to among AI developers, even if their use is not directly monetized. He had told investors that Meta's AI is already powering improved user engagement and stronger advertising tools for Facebook, Instagram and its other apps.
Meta.AI, the company's ChatGPT competitor, has reached 1 billion monthly active users, Zuckerberg touted at a recent shareholder meeting. Meta is also looking to use AI to fully automate advertising campaigns.
Meta Stock: Pullback After Recent Breakout
Meanwhile, Meta stock appears set to pull back this week after a recent breakout. Shares are down roughly 1% on Meta's weekly chart as of Friday morning.
Meta stock jumped 8% last week, breaking out above a 662.67 cup-with-handle buy point, according to the IBD MarketSurge. Shares are now hovering near the top of a 5% buy zone from a recent break out. Shares broke out from a 662.67 cup-with-handle buy point early last week, according to the IBD MarketSurge.
Strong first quarter results and the 90-day pause for President Donald Trump's tariffs on good from China helped ease some investor concerns.
Even with the recent pullback, Meta stock's 18% year-to-date gain is the best overall performance among the Magnificent Seven stocks.
