Meta spending big on AI talent but will it pay off?

Mark Zuckerberg and Meta are investing billions to acquire top talent in order to catch up in the generative artificial intelligence competition, raising questions about the rationale behind the spending. OpenAI chief Sam Altman recently expressed concern that Meta has promised $100 million bonuses to engineers who switch to Zuckerberg’s company, where they can expect substantial salaries.

Several OpenAI staff members have allegedly accepted Meta’s invitation, partnering with Scale AI’s founder and ex-CEO Alexandr Wang at the tech giant in Menlo Park. In mid-June, Meta acquired a 49 percent share in Scale AI for over $14 billion, which included bringing Wang into the partnership.

Scale AI annotates data to enhance the training of AI models for companies, governmental organizations, and research facilities.

“Meta has finalized our strategic partnership and investment in Scale AI,” a Meta spokesperson told AFP.”As part of this, we will deepen the work we do together producing data for AI models and Alexandr Wang will join Meta to work on our superintelligence efforts.”

US media outlets have reported that Meta’s recruitment effort has also targeted OpenAI co-founder Ilya Sutskever; Google rival Perplexity AI, and hot AI video startup Runway.Meta chief Zuckerberg is reported to have sounded the charge himself due to worries Meta is lagging rivals in the generative AI race. The latest version of Meta AI model Llama finished behind its heavyweight rivals in code writing rankings at an LM Arena platform that lets users evaluate the technology.

Meta is integrating recruits into a new team dedicated to developing “superintelligence,” or AI that outperforms people when it comes to thinking and understanding.Tech blogger Zvi Moshowitz felt Zuckerberg had to do something about the situation, expecting Meta to succeed in attracting hot talent but questioning how well it will pay off.

“There are some extreme downsides to going pure mercenary… and being a company with products no one wants to work on,” Moshowitz told AFP.”I don’t expect it to work, but I suppose Llama will suck less.” While Meta’s share price is nearing a new high with the overall value of the company approaching $2 trillion, some investors have started to worry.

Institutional investors are concerned about how well Meta is managing its cash flow and reserves, according to Baird strategist Ted Mortonson.

“Right now, there are no checks and balances” with Zuckerberg free to do as he wishes running Meta, Mortonson noted.The potential for Meta to cash in by using AI to rev its lucrative online advertising machine has strong appeal but “people have a real big concern about spending,” said Mortonson.

Meta executives have laid out a vision of using AI to streamline the ad process from easy creation to smarter targeting, bypassing creative agencies and providing a turnkey solution to brands.

AI talent hires are a long-term investment unlikely to impact Meta’s profitability in the immediate future, according to CFRA analyst Angelo Zino.”But still, you need those people on board now and to invest aggressively to be ready for that phase” of generative AI, Zino said. “Even firms without the most advanced LLMs, like Meta, can succeed as long as their models perform well within their specific market segment,” Canayaz said.