Analysts suggest the hiring pause might indicate broader issues in the AI sector, potentially signaling a bubble.
Meta, the parent company of Facebook, has put a hold on hiring for its artificial intelligence (AI) division, as reported by CNBC on Thursday.
Meta has been a prominent and aggressive recruiter in the AI field, attracting talent from competitors with substantial compensation packages and acquiring startups to bring in specialized expertise.
The Wall Street Journal initially reported the hiring freeze, noting that it was announced the previous week amidst a significant restructuring of Meta’s AI division. The division was reorganized into four teams: focusing on building machine superintelligence, AI products, infrastructure, and long-term research. Transfers between teams have been limited, and external hiring now requires approval from Meta’s chief AI officer, Alexandr Wang.
A Meta spokesperson confirmed the hiring pause, attributing it to “basic organizational planning,” including onboarding processes and annual budget considerations.
Meta has invested heavily in AI this year, recruiting more than 50 specialists. Some reportedly received signing bonuses as high as $100 million. To secure Wang, the founder of data labeling startup Scale AI, Meta acquired a 49% stake in his company for $14.3 billion. Other tech companies, including Microsoft, Amazon, and Alphabet, have also invested billions in AI talent and development, according to public records.
Analysts have cautioned that this level of spending could negatively impact shareholder returns. In a research note recently cited by the WSJ, Morgan Stanley analysts suggested that increasing stock-based compensation could be detrimental if results are disappointing, warning that high salaries could dilute shareholder value without generating clear innovation gains.
Some experts are also expressing concern that AI investment is increasing at an unsustainable rate. OpenAI CEO Sam Altman stated to The Verge last week that current market conditions resemble the dot-com bubble of the 1990s, during which overvalued internet stocks crashed. Similar concerns have been voiced by Alibaba co-founder Joe Tsai, Ray Dalio of Bridgewater, and Torsten Slok of Apollo Global Management.
However, others contend that fears of an AI bubble are exaggerated. Wedbush analyst Dan Ives told CNBC that tech stocks are still “undervalued,” and that Meta’s hiring pause is simply an organizational adjustment. Daniel Newman, CEO of Futurum Group, concurred, describing the freeze as a “natural resting point” as Meta integrates new personnel.
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