Source: Jinshi Data
Do more Meta layoffs mean the company still has redundancies to cut, or do they indicate that its AI investments are actually starting to pay off?
According to foreign media reports, Meta plans to lay off 20% of its workforce (approximately 16,000 people), the largest layoff since the end of 2022, aimed at offsetting the high costs of AI infrastructure and improving AI-assisted efficiency.
A top Wall Street analyst said in a report on Monday that any further cuts to Meta's headcount could actually mean the company is successfully reinventing itself as an "AI-first" enterprise. And this may not be good news for its competitors.
Although Meta Platforms (META.O) has made deep investments in the AI field, it has not yet launched a leading model like Google and OpenAI, Bernstein analyst Mark Shmulik said. Meta's aggressive push to transform itself into a top-down AI company could put it ahead of its competitors and trigger a wave of "panic" as peers rush to follow suit.
Meta is investing hundreds of billions of dollars to build AI data centers and attract talent to strengthen its AI research team. Last week, Reuters was the first to report that the company is weighing whether to proceed with layoffs, and some managers have been asked to develop cost-cutting plans.
Bernstein's Shmulik said this could indicate that Meta is taking the lead in a key front of the AI competition. While companies can win with world-class frontier models, they can also beat competitors by deeply deploying AI into their core businesses, making their competitive moats "indisputably wider."
Shmulik wrote: "Meta has demonstrated significant returns from deploying AI into core workloads. But if the company can now fundamentally redesign its operating system to be truly AI-centric, its potential advantages in cost and performance may be difficult to surpass."
By one measure, Zuckerberg's efficiency reforms over the past three years have paid off. According to data shared by Bernstein this week, Meta's revenue per employee has continued to increase over the past period and surpassed Amazon's last year. Only Pinterest has a higher figure for this metric.
At the same time, the Bernstein report shows that Meta's capital expenditure and R&D investment per employee are significantly higher than those of its competitors, which may also explain the potential layoffs.
Investors seemed to react positively to Meta's consideration of further cost cuts, with the company's stock rising about 2% in early trading on Monday.
The company is also actively promoting the internal application of AI. Foreign media previously reported that Meta said that starting this year, it will rate employees based on their "AI-driven impact" in performance evaluations and track how some teams use these tools.
Companies like Atlassian and Block have recently cited AI as one of the reasons for layoffs, raising the question of whether some business leaders are engaging in "AI greenwashing," that is, using AI to掩盖 other reasons for layoffs, such as financial problems or over-hiring during the COVID-19 pandemic.
Bernstein's Shmulik said that while "AI greenwashing" is possible at Meta and other companies, the layoffs could also indicate that the company has begun to see efficiency gains.
From the end of 2022 to the beginning of 2023, Zuckerberg announced the "Year of Efficiency," during which the company cut more than 20,000 jobs, reduced non-technical positions, compressed management layers, and pushed up its previously sluggish stock price.
Shmulik said that if Meta goes through a similar cycle again in the AI era, it could set a template for a true "AI-first company."
He wrote: "If a major company can redraw the blueprint for an AI-enabled organization, other companies will quickly try to replicate it... and we suspect this could trigger a series of hasty transformations, immature strategies, and passive restructurings throughout the industry ecosystem."
