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Can you begrudge a star for playing the hits when that’s what their audience clamors for?
Meta (META) CEO Mark Zuckerberg isn’t on tour, but he has a knack for giving Wall Street what it wants. The playbook is familiar to Meta investors by now: lay people off, and spend more money on computing deals.
Meta stock rose as much as 3% on Monday after the social media giant with AI ambitions announced a cloud-computing deal with Nebius (NBIS), worth as much as $27 billion — and is reportedly considering the largest round of layoffs in several years, a 20% reduction.
The one-two punch of lowering headcount and investing in AI infrastructure represents a strategy that much of corporate America is considering or has already dabbled in. Spend, sure, but also find offsetting savings, simultaneously telegraphing financial responsibility and efficiency gains.
Zuckerberg already has a history of success doing this.
While some investors remain skeptical that the industry’s massive AI build-out will bear fruit, shareholders have time and again given him the benefit of the doubt, primarily because Meta’s advertising machine continues to churn out profits. That gives him leeway to take financial risks. And the success reinforces his vision that AI is already boosting the business.
In 2023, Meta’s “year of efficiency” led to the elimination of thousands of roles, a move that Wall Street cheered and investors bought. As Zuckerberg wrote at the time, “Profitability enables innovation.”
The two pieces are once again in symbiosis. But this time, the expensive AI expansion may also be further offset by AI’s own productivity gains available to the remaining employees.
Though Meta didn’t confirm Reuters’ reporting that the layoffs were about preparing for a more fully AI-assisted workforce, that model would represent the next level of efficiency from the streamlined version of the company molded in 2023.
If the advancement of AI enables a corporate fantasy of running a business without employees, or far fewer of them, the double move of shrinking a workforce while pushing AI seems inevitable.
And potentially a playbook for other companies to copy.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
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