Meta’s AI strategy has scored an early user-acquisition win: its Muse assistant topped app-store charts within a week of launch and has surpassed 10 million downloads in North America. The company has also introduced Muse Wonder, a new frontier-model series. But high computing costs and the absence of clear AI-driven revenue leave investors waiting for evidence that Meta’s spending will pay off. Shares fell 7% the day after strong third-quarter results and positive early adoption figures, reflecting concern about the hundreds of billions of dollars the company has committed to future investment.
In a recent podcast, CEO Mark Zuckerberg recalled asking 29-year-old AI chief Alexandr Wang late last year, “Are you sure this is going to work?” Zuckerberg says the response to Muse has exceeded expectations. Whether Meta can turn that interest into durable revenue remains central to the success of its AI strategy.
Muse draws downloads, but monetization is still untested
Muse reached the top of app-store rankings within a week of launch and went on to exceed 10 million downloads across North America. Meta’s team had not expected to bring the product to market before OpenAI’s competing Dots, which launched three weeks after Muse.
Rapid adoption has not yet translated into profits. Muse continues to consume cash because of its substantial computing costs. Meta’s longer-term plans include letting users shop through the assistant and use its AI tools to buy more virtual-reality headsets. Those paths to revenue are still being tested.
Meta is also committing significant computing resources and talent to Muse Wonder, a frontier-model family intended to compete with products from OpenAI, Anthropic and other developers. On the third-quarter earnings call, Zuckerberg said he was optimistic that AI and hardware investments would eventually generate revenue. Investors, however, are weighing the scale of the spending against the time it may take to produce returns.
David Wagner, a portfolio manager at Aptus Capital Advisors, said the bill is large: Zuckerberg has won the market narrative for now, but has yet to demonstrate returns on the investment. About 98% of Meta’s second-quarter revenue still came from its traditional advertising business, underscoring that AI has not yet become a major source of income.
Layoffs and reshuffling accompany Meta’s AI pivot
Meta’s push into AI has involved a broad reorganization. The company began layoffs in March and carried out another major round in May, affecting about 10% of its workforce. A further 7,000 employees were reassigned as Meta reorganized its AI-focused technology and product teams. Some engineers were temporarily moved into individual-contributor roles; in September, the company asked some of them to return to management positions.
The changes also weighed on employee morale. Staff raised concerns about management and the restructuring, while a keyboard-activity tracking program introduced in April prompted unease. In a June internal meeting, Meta Chief Technology Officer Andrew “Boz” Bosworth said morale might not be at its lowest point in 20 years, but was close to it.
During the reorganization, Zuckerberg and Wang were seated near one another at work. Since last year, they have stepped up recruiting, offering top researchers compensation packages worth hundreds of millions of dollars. Senior leaders including former GitHub CEO Nat Friedman were also given considerable latitude to advance their AI projects. Meta’s approach of testing ideas in small teams and repeatedly adjusting the organization ultimately led to Muse and Muse Wonder.
Board arrangements and lawsuits remain in focus
Meta has also taken steps to preserve Zuckerberg’s control of the company. Company filings show that at a dinner in September, Zuckerberg told board members he was considering selling his Palo Alto home to prepare for a proposed California billionaire tax. Some directors left early. Four days later, a special committee proposed a plan that could provide Zuckerberg with $20 billion in “immediate liquidity” if the tax is enacted, without weakening his control of Meta. The company also plans to ensure that new AI financing does not dilute his control.
Meta said the substantial increase in shareholder value has been due in large part to Zuckerberg’s leadership, vision and management. The proposed arrangement highlights the board’s view of his long-term role and ties his personal tax considerations to the company’s control structure.
Legal challenges are continuing. Earlier this year, Zuckerberg testified in a major lawsuit alleging that Meta’s platforms harmed teenagers’ mental health. A jury found Meta negligent, and the company is appealing. A separate case brought by attorneys general from multiple states, Washington, D.C. and U.S. territories was settled in August. Meta agreed to adjust app features, including daily usage limits and pausing notifications overnight.
This week, a jury in a New Mexico case involving the Cambridge Analytica scandal ordered Meta to pay $25 billion. The company plans to appeal. Legal costs and potential liabilities, alongside the scale of AI investment and the pace of commercialization, will continue to shape how investors assess Meta’s strategy. Muse’s download figures offer a new growth story, but its revenue contribution and the returns on Meta’s vast spending remain to be demonstrated.