Meta's AI gamble is suddenly looking like a win for Mark Zuckerberg.

That was far from a given. Even the Meta CEO was doubting himself. His company had poured hundreds of billions of dollars into AI investments with largely unproven results.

"Are you sure this is going to work?" he asked his 29-year-old AI chief, Alexandr Wang, at the end of last year, he recalled on a recent episode of the "Cheeky Pint" podcast.

Those risky AI bets — which one analyst compared to throwing spaghetti at the wall — as well as the massive layoffs and reorganization that came with them, are now starting to pay off. Meta beat its AI rivals to the punch with its new AI assistant, Muse, and it finally released a frontier AI model. Although Muse is bleeding cash amid high compute costs, analysts are excited by its moneymaking potential.

Zuckerberg is riding high, too. Sipping a Guinness alongside Wang during a recent podcast interview, the pair extolled Meta's AI prowess.

"You never know when you launch something how it's going to be received," the CEO said. "There's always the case where you get a home run, which in this case it was, right? And it's just like extremely well received right off the bat."

And Meta seems to believe in Zuckerberg's leadership more than ever. His latest coup: Convincing the company to issue a new class of shares after he threatened to list his Palo Alto compound and leave California as voters weigh a billionaire tax.

The big question is how long the good vibes will last. Meta is still spending gobs of money on AI without a concrete financial payoff. Some remain skeptical.

"The bill is huge," David Wagner, a portfolio manager at Aptus Capital Advisors, told Business Insider.

"He's won the narrative. He hasn't proven the return yet."

Meta's social reckoning era

Zuckerberg is no stranger to public discourse. He's undertaken multiple personas: the nerdy wunderkind in hoodies, the jacked wife guy, the unapologetically masculine Trump ally.

At the beginning of this year, it looked as if he was headed for a new reckoning, and it wasn't just because of the aptly named sequel to "The Social Network."

Zuckerberg was on trial, taking the stand in a landmark lawsuit that alleged Meta's platforms harmed the mental health of young people. (Meta was found negligent and is appealing.) It was one of three major lawsuits this year that put the company on the defensive against claims that its technology posed safety risks to children.

And there were the more typical Zuckerberg cringe moments, too, like his front-row appearance at a Prada fashion show that raised eyebrows across the internet.

On the inside, employee morale was waning. Though the billionaire CEO had called 2026 "the year of AI," Meta had little momentum, and unpopular decisions — including a program to track employee keystrokes — amplified the discontent.

Also, Meta had one of its largest rounds of layoffs, ever. Meta began trimming staff in March, followed by a huge round in May, when it laid off about 10% of its workforce.

Separately, Meta reshuffled another 7,000 workers as part of an AI-focused reorganization of its tech and product teams. Many engineers were relegated to individual contributor status. Meta later asked some of the employees it had demoted to return to their managerial roles.

The AI push didn't seem to be paying off: In the second quarter of this year, 98% of revenue came from its traditional advertising business — not AI.

Morale was "maybe not the worst it's ever been in 20 years here, but it's probably up there," Meta's chief technology officer, Andrew "Boz" Bosworth, said during an internal call in June.

The groundwork for Meta's comeback

Amid the chaos, Zuckerberg laid the groundwork for a comeback. Wang and Meta's elite AI researchers moved their desks to sit near Zuckerberg.

Starting last year, Zuckerberg and Wang also went on a talent-hiring spree, dangling pay packages worth hundreds of millions of dollars to poach top researchers.

Zuckerberg empowered key lieutenants, including former GitHub CEO Nat Friedman, to go ham on any vision they had, including on his pet project, an AI assistant. It all fit into Zuckerberg's longtime playbook of embracing small teams and overseeing reorgs until something works — move fast and break things, as he has infamously put it.

It worked.

Muse, the long-awaited Meta AI agent, became a breakout hit. A week after it launched, it shot to the top of the app store, and has since achieved more than 10 million downloads in North America. The team was stunned to have beaten OpenAI to market, a person familiar with the matter said. OpenAI's rival product, Dots, launched three weeks later.

Meta also threw unprecedented compute and talent at building a series of frontier AI models, called Muse Wonder, that could keep up with those from giants like OpenAI and Anthropic.

On Meta's third-quarter earnings call, Zuckerberg was optimistic that Meta's AI and hardware investments could soon become cash cows, as people shop through Muse and buy more virtual-reality glasses powered by the company's growing AI chops.

Meta, meanwhile, views Zuckerberg as more critical than ever to its long-term fortunes.

Key board members abruptly excused themselves from a dinner with Zuckerberg in September after he told them he was going to sell his Palo Alto estate in response to California's proposed billionaire tax, Meta disclosed in a filing on Wednesday.

Four days later, a special committee returned with a deal that would give Zuckerberg $20 billion in "immediate liquidity" to cover the tax — if it passes — without reducing his controlling stake in Meta. Meta also made plans to ensure that billions in fresh AI fundraising wouldn't dilute Zuckerberg's control.

"Meta's track record of significant value creation for its shareholders is in large part due to his strong leadership, unique and creative vision, and exceptional management abilities," the company said in a press release.

The personal win comes as some of his other problems have blown over. Meta settled a major lawsuit brought by attorneys general across states, Washington, DC, and US territories. As part of the settlement, the company committed to make changes to its apps, such as daily time limits and pausing notifications overnight. The agreement was part of an August settlement, a move that allowed Meta to call out its competitors such as YouTube and TikTok.

"All platforms should empower parents and support teens by putting the same measures in place, because we know that when teens are restricted on one app, they simply move to another," the company said in a blog post at the time.

Big questions still loom. The day after Meta reported strong earnings and Muse adoption, its stock fell 7% as investors absorbed the scale of the company's hundreds of billions of dollars in future spending commitments.

And the legal troubles keep on coming. This week, a New Mexico jury also ordered Meta to pay a staggering $25 billion over the Cambridge Analytica scandal, a case that Meta plans to appeal.

Whether Zuckerberg's strategy is sustainable or not, the vibe shift has been notable — and may have proven naysayers wrong, at least until the next period of chaos erupts.

"Meta is cool again," Jesse Cohen, an analyst at Investing.com, said in a note. "That's the Muse effect."

• Meta CEO Mark Zuckerberg considered moving out of California because of a proposed billionaire tax.
• Zuckerberg would get $20 billion in "immediate liquidity" if the billionaire tax passes.
• Meta made the offer to Zuckerberg to help keep him in California after he considered leaving.

Meta CEO Mark Zuckerberg considered moving out of California because of its proposed billionaire tax, Meta disclosed in a new SEC filing on Wednesday.

Next month, Californians will vote on Proposition 40, a one-time tax on the assets of the state's billionaires.

The filing said that Zuckerberg told a special committee formed by Meta that he was considering moving.

In response, the committee concluded that it was "critically important" for Zuckerberg to keep running Meta close to its Silicon Valley headquarters — particularly to its AI division, Meta Superintelligence Labs.

The filing said the committee got Zuckerberg to agree to remain in California or any other jurisdiction where Meta has its corporate headquarters for eight years, barring unforeseen circumstances.

As part of its efforts to ensure he can remain in charge as it raises more cash for its AI initiatives, the company is granting the Meta CEO a new stock class.

The shares would give Zuckerberg $20 billion in "immediate liquidity" to cover the tax by selling stock without losing control of Meta, if the tax passes. The new shares wouldn't add to Zuckerberg's net worth or increase his percentage ownership of Meta.

"The goal is to keep Mr. Zuckerberg continuing to lead the Company from California," the filing says.

Meta declined to comment. A person familiar with the matter said that the new class of shares, which totals $150 billion, is also intended to raise capital, compensate employees, and keep Meta's stock price on the right track.

Meta's filing showcases how tech billionaires are responding to the tax proposal. Some, including Google cofounder Sergey Brin and former CEO Eric Schmidt, poured hundreds of millions of dollars into attack ads against the proposal.

While Zuckerberg has taken a lower-key approach, it's clear he's been taking the proposed tax seriously.

The Meta CEO, who is worth about $240 billion according to Forbes, has multiple residences in California, including in Palo Alto and Lake Tahoe.

He also has a sprawling property portfolio outside the state, including a doomsday bunker in Hawaii, a waterfront mansion in Miami, and a castle in Ireland.

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• Meta's AI agent, Muse, is unprofitable due to "very high compute costs," CEO Mark Zuckerberg says.
• Meanwhile, Meta expects Reality Labs, its AI glasses division, to lose $15 billion next year.
• The social media giant has a plan to fix that.

Meta says some of its biggest cash incinerators could finally start turning profits.

The social media giant, which generated over 97% of its quarterly revenue from ads, has faced persistent questions from investors about the lack of profitability in its AI and hardware initiatives.

Meta CEO Mark Zuckerberg addressed those concerns head-on during its third-quarter earnings call on Wednesday.

Zuckerberg said that Muse, the AI assistant it launched last month, is unprofitable since it's "very compute intensive to run." Meta expects to start turning that around next year by massively improving Muse's efficiency.

"If compute efficiency continues improving quickly for another few years, which we think is highly likely, then Muse will be highly profitable over multiple years," he said.

Meta plans to make money from Muse by taking a small transaction fee off of purchases it drives, Zuckerberg said at Meta's Connect conference last month.

Zuckerberg added that Muse, which launched only in the US and Canada, wasn't launched globally due in part to the amount of compute it requires. (Meta's North American users are generally its most lucrative.)

Zuckerberg also struck a positive note about its cash-hemorrhaging Reality Labs division, which makes products like Meta Ray-Bans and virtual reality glasses.

Meta expects Reality Labs to narrow its losses to about $15 billion in 2027, down from the $18 to $19 billion it expects to lose this year. The division should start trending toward profitability next year, as Meta's AI systems make it more useful, Zuckerberg said.

"I continue to believe that the path to delivering holographic experience, of bringing together the physical and digital worlds and everyday glasses, will come through VR first," Zuckerberg said.

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• A New Mexico judge ordered Meta to pay $25 billion over how it handled its users' data.
• It could be the largest penalty against Meta in history.
• Meta recently agreed to an $18 billion settlement over the impact of its tech on kids.

A judge in New Mexico ordered Meta to pay $25 billion for misleading users about how it handled their data and for failing to prevent misinformation on Facebook.

The ruling could be the largest penalty in Meta's history. Last month, Meta settled a child-safety lawsuit brought by a group of US states for $18 billion.

The New Mexico case focused on Meta's handling of user records that Cambridge Analytica used for campaign purposes during the 2016 election. New Mexico alleged that Facebook misrepresented the extent of users' control over their data on the app.

"Facebook's wrongdoing—over the course of years and systematically broadcast to the public—goes to the heart of Facebook's core business practices," Judge Francis J. Mathew wrote in the ruling. "It relates to the way in which Facebook induces people onto the platform and ultimately keeps them there."

In a statement, Meta's chief legal officer, C.J. Mahoney, said the penalty "makes it all but impossible to do business in the state of New Mexico."

"At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online," Mahoney said. "We are confident we will prevail on appeal."

A jury ruled against Meta last month, finding the company committed nearly 50 million violations of a New Mexico law prohibiting deceptive trade practices. Each violation carries a penalty of up to $5,000.

Some Meta executives, including CEO Mark Zuckerberg, were deposed in the case. New Mexico first sued the company in 2021, and the case went to trial last month.

In internal Meta communications presented at the trial, Zuckerberg appeared to obfuscate methods for users to hide their data.

"Give them a chance to change their privacy settings but obviously don't encourage it," Zuckerberg wrote in one internal message.

Meta's next move remains unclear. The company didn't immediately respond to a request for comment on Wednesday.

This is a breaking news story. It will be updated.

• Joel Kaplan, Meta's chief global affairs officer, is leaving, Meta confirmed to Business Insider.
• Kaplan, a Republican who once worked for the Bush administration, spent 15 years at Meta.
• Kaplan helped bridge ties between Meta CEO Mark Zuckerberg and President Donald Trump.

A longtime political operative at Meta who played a key role in bridging ties between the company and President Donald Trump's administration is leaving.

Joel Kaplan, Meta's chief global affairs officer, will leave after the midterm elections and a transition period, Axios first reported. Meta confirmed the report to Business Insider.

A veteran Marine Corps artillery officer, Kaplan is a Republican who served as an advisor and deputy chief of staff to former president George W. Bush.

Kaplan joined Meta in 2011. At Meta, he oversaw the company's response to policy issues ranging from the Cambridge Analytica scandal to the end of its fact-checking program.

Kaplan helped repair a once-fraught relationship between Meta CEO Mark Zuckerberg and Trump after Meta temporarily suspended Trump's account following the January 6 riot.

Kaplan posted on X on Tuesday that he plans to spend time with his family and figure out what to do next.

Kaplan didn't respond to a request for comment from Business Insider.

Kaplan has served as Meta's chief global affairs officer since 2025, succeeding former UK politician Nick Clegg. Other Meta executives will share his responsibilities, Axios reported.

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