Meta’s attempt to copy a Chinese AI lab backfired, leading to a major AI strategy overhaul. Zuckerberg invested billions to revamp Meta’s AI unit after disappointing developers with Llama AI models. Analysts expect slower revenue growth in the second quarter. Meta’s AI talent grab may not raise expenses but could surpass projections.

Meta’s AI blitzkrieg includes hiring talent, led by Scale AI’s CEO Wang. Meta’s Superintelligence Labs, under Wang and Friedman, aims to dominate AI. Despite the hiring spree, Cantor analysts expect only slight expense increase. Zuckerberg believes the new AI talent will help Meta create more powerful AI technology.

Meta’s struggle with Llama 4, a new AI model, is traced back to DeepSeek’s innovative R1 model. Llama 4, a MoE model, failed to impress developers, leading to internal doubts. Meta is considering a proprietary AI model over open-source strategy. Analysts and insiders question Meta’s current AI direction and hiring strategy.

Despite AI struggles, Meta’s core online ad business remains strong. Zuckerberg plans to invest billions in computing infrastructure for AI projects. Bank of America analysts see Zuckerberg’s confidence in Meta’s revenue trajectory. Meta and rivals are competing for AI talent reminiscent of the self-driving car frenzy. Investors are receptive to Meta’s AI spending and strategy shifts.

Read more at CNBC: Meta goes big on AI ahead of second-quarter earnings