Facebook parent company Meta Platforms is in talks to make a multibillion investment in the startup Scale AI, according to a Bloomberg report. Meta stock closed slightly lower Monday, hovering within buy zone from a recent breakout.
The funding round for Scale AI could exceed $10 billion in value, unnamed sources told Bloomberg, which would make it one of the largest private company funding events of all time. Scale AI provides data labeling services for companies like Microsoft and OpenAI, helping to enable to training and production of large language models. Meta has previously 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.
Meta had previously invested in Scale AI's most recent $1 billion Series F funding round, which valued the San Francisco-based startup at $18 billion. Scale generated $870 million in sales last year and expects sales to more than double to $2 billion in 2025, according to Bloomberg.
Meta has been stepping up its investments into AI startups. Earlier this year, the Facebook parent company became a strategic investor in Databricks, joining a $10 billion venture investment round that valued Databricks at $62 billion.
On the stock market today, Meta stock fell a half-percent to close at 694.06.
Meta's Llama AI Models
The reported Scale AI interest comes as Meta is already spending big on its generative AI ambitions.
In late April, Chief Executive Mark 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 the training and operation of Meta's Llama AI models, which it is publishing for developers to use as open-source code. A big part of the payback that Meta expects from that investment is improved user engagement and stronger advertising tools for Facebook, Instagram and its other apps, as Zuckerberg has detailed to investors.
Meta's ChatGPT chatbot competitor, Meta.AI, has reached 1 billion monthly active users, Zuckerberg touted at a recent shareholder meeting. In the meantime, Meta plans to incorporate generative AI into its advertising offering to offer fully automated marketing plans by next year, according to a Wall Street Journal report. The report boosted Meta stock while dragging down shares of top advertising firms like Omnicom Group, WPP Group and Interpublic Group.
Meta Stock: Recent Breakout
With Monday's action Meta stock is 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.
After sliding more than 20% from February through April on tariff concerns, Meta has rallied back to approach highs from earlier this year. The stock is ahead 8% so far in June and rallied 18% in May.
Strong first quarter results and the 90-day pause for President Donald Trump's tariffs on good from China helped ease some investor concerns.
While still below a record high of 740.91 from mid-February, Meta's shares are ahead 19% overall in 2025. That is the best overall year-to-date gain among the Magnificent Seven stocks.
