Zuckerberg Writes a $14B Check to Catch Up in the AI Race
Social media giant Meta Platforms (META) is making its biggest move yet in the AI race. CEO Mark Zuckerberg is set to invest $14 billion in Scale AI, a top data-labeling startup, according to The Information. The deal would give Meta a 49% stake in Scale AI, without gaining full control of the company. Along with the stake, Meta will bring on Scale's founder, Alexandr Wang. He will help lead a new AI lab at Meta.
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This move highlights Zuckerberg's push to regain ground against leading AI players like OpenAI and Google, owned by Alphabet (GOOGL). It should be noted that Meta's recent launch of Llama 4 (its large language AI model) received a lukewarm response, and its more advanced 'Behemoth' model is yet to be launched. By bringing in Alexandr Wang, a proven AI builder with strong business skills, Meta hopes to refocus its strategy and accelerate progress across both research and AI products.
Wang Set to Steer Meta's AI Push
Zuckerberg sees Wang as someone who can lead in tough times. Wang knows both the tech and the business side of AI. He built Scale AI from scratch. The company helps train AI systems by labeling huge amounts of data. It works with OpenAI, Google, Microsoft (MSFT), and even the U.S. defense sector.
Insiders say Zuckerberg sees Wang as a 'wartime CEO.' He's betting that Wang can realign Meta's AI plans and help it leap ahead.
Zuckerberg's Boldest AI Move Yet
Meta is not buying Scale AI outright, and that's a clear strategic choice. The company is under watch by U.S. regulators, who are already questioning its market power. A full takeover could trigger more legal trouble for the social media giant. So instead, Meta plans to take a 49% stake. This way, it gains access to Scale's top talent and tools without taking full control.
In addition, it's a smart way for Meta to bring in fresh expertise from outside the company. Scale's founder, Alexandr Wang, will help lead Meta's new AI lab and will be joined by some of his top engineers.
Other tech giants have done the same in the past. Instead of full takeovers, companies like Google and Microsoft have taken large stakes in AI startups such as Character.AI and Inflection AI. This strategy allows them to tap into top talent and cutting-edge tools without triggering strict regulatory reviews.
For Meta, the deal is about much more than money. It's a way to strengthen its AI roadmap, which has struggled to keep pace. With Scale's tools and team, Meta hopes to close the gap with OpenAI and other fast-moving rivals.
Is Meta a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 42 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average META price target of $698.07 per share implies that shares are fairly valued.
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