Looking back: In 2025, Meta shifted its weight behind AI, launching an audacious hiring spree that saw it poach top researchers from OpenAI, Google, and Apple—reportedly paying signing bonuses of up to $100 million per recruit and multiyear packages that reached $300 million. This challenged the AI industry’s “mission over money” principle and sparked a talent war.
The company’s new Meta Superintelligence Labs swelled with talent, only for leadership to announce 600 AI job cuts by October—including roles in flagship labs—amid restructuring and an intensified focus on “breakthrough” initiatives.
Simultaneously, Meta doubled down on infrastructure, with billions funneled into massive data centers and a headline-grabbing $14.3 billion investment in Scale AI. Yet this hiring-and-firing cycle exposed deep strategic churn, driven by CEO Mark Zuckerberg’s impatience with underwhelming returns from the Llama 4 model and a desire to secure pole position for the next leap in AI performance.
The challenge: Even as the AI push intensified, Meta’s Reality Labs experiment continued to produce eye-watering losses—$4.4 billion for Q3 alone—against $470 million in revenues, as adoption of Quest and AR/VR hardware trailed even revised forecasts.
The yearslong push on immersive technology continues to disappoint, and 2025 marked yet another year when hardware could not offset its massive R&D costs, fueling skepticism from investors and pressure on Zuckerberg to prove strategic patience or shift course.
The metaverse experiment seems to be winding down, however, on the reports of restructuring and year-end layoffs at Reality Labs.
The ad factor: The advertising business, Meta’s profit engine, surged on the back of AI. In 2025, over a billion users interacted with Meta AI across its apps—and as of December, those conversations directly powered highly personalized ad targeting.
Marketers gained new levers for campaign automation as Meta’s genAI tools created media, optimized spend, and selected audiences with minimal human input.
The company’s Advantage+ and new AI value rules enabled up to 19% lower cost per acquisition for advertisers willing to trust the algorithm, per Meta.
However, privacy controversies flared and some regulators bristled at the lack of opt-outs for AI-based targeting. Still, Meta’s revenue outlook was buoyant, with Q4 guidance topping $56 billion on the strength of its AI-enhanced ad machine—even as the underlying expense base surged to $118 billion for the year, per the SEC.
Looking forward: Revolving hiring cycles, surging costs, and persistent Reality Labs losses highlight deep cultural questions at the heart of the company’s AI pivot. Meta enters 2026 with its fortunes wrapped tightly around advertising’s adaptability, the pace of AI innovation and whether users, marketers, and regulators will tolerate the new rules of engagement it’s writing atop the world’s largest social platforms.
Meta’s 2026 trajectory hinges on whether its AI-fueled ad engine can outrun rising costs, regulatory heat, and user fatigue long enough to deliver the next wave of performance gains for brands.