Meta released its Muse Spark AI model in April, one year after CEO Mark Zuckerberg spent over $14 billion to bring in Alexandr Wang from Scale AI and establish Meta Superintelligence Labs. The proprietary foundation model marked Meta's first departure from its open-source Llama approach, following what industry experts called a strategic blunder when Llama 4's release fell flat in April of last year. Zuckerberg now faces the challenge of converting the new model into financial success through paying users, as Meta's stock declined 18% over the past 12 months despite reporting 33% revenue growth in the first quarter. The company still derives 98% of its revenue from advertising and has struggled historically to monetize products beyond ads, while competitors OpenAI, Anthropic and Google maintain stronger positions in the AI market.
Meta Releases Muse Spark Model After $14 Billion Scale AI Investment
Wang's delivery of the Muse Spark AI model in April marked Meta's first jump into proprietary foundation models. The model was designed to plug into Meta's apps like Facebook and Instagram as well as AI-powered devices like the Ray-Ban Meta glasses, according to Thomas Randall, an analyst at the Info-Tech Research Group. Meta also launched a standalone Meta AI app and site.
The company announced its $14.3 billion investment for roughly half of Scale AI in June of last year, bringing over Wang and his top lieutenants to lead the newly established Meta Superintelligence Labs. Randall said Meta would be "lost" without these big-name AI hires in what he called a "strategic rebuild" for the company.
Since the Muse Spark release, Meta has unveiled new AI and business-related subscription plans as part of an effort to expand beyond online ads. A Meta spokesperson said the company is testing API access to Muse Spark's underlying technology with early partners and plans to release it this month.
Meta Stock Declines 18% Despite 33% Revenue Growth
Meta's stock fell 18% over the past 12 months, making it the worst performer in the megacap group along with Microsoft. The decline occurred despite Meta reporting 33% revenue growth in the first quarter, the fastest rate of expansion for any period since 2021.
"Meta needs to provide more proof points of both adoption and commercialization," said Ralph Schackart, an analyst at William Blair who recommends buying the stock. "Investors are looking for Meta to monetize a new AI-first product, beyond the substantial positive impact AI is having on enhancing the advertising models."
Meta still counts on ads for 98% of revenue. The company's Reality Labs division has generated over $80 billion in total losses since late 2020. Schackart said he wants to see "tangible evidence of a growing list of new, AI-first products created by Muse Spark, even if monetization lags."
Developers Report Limited Access to Meta AI Technology
"I think the AI community largely ignores Meta at this point," said Rob May, CEO of the startup Neurometric. May characterized the Muse Spark release as a "yawn" among the AI community since the technology is not widely accessible. He said he used to be in regular touch with Meta for Llama-related issues but now "can't get them to return messages."
Krish Subramanian, CEO of consulting firm KOI AI and former product head at IBM Consulting, said developers are more excited about Google's AI models than Meta's offerings. "The lack of developer trust will come back to hit them if they don't focus on third-party developers," Subramanian said.
Andrew Moore, CEO of enterprise startup Lovelace and former Google Cloud AI chief, said Meta has focused on making its models more efficient through training techniques, which could be a major differentiator among developers worried about rising costs of foundation models.
Meta Fires 8,000 Workers in May Layoffs
Meta has been slashing jobs throughout the year, firing about 8,000 workers in May. The cuts spanned departments, including teams working in roles related to trust and safety, according to people familiar with the matter who asked not to be named.
There is pressure on Wang and former GitHub CEO Nat Friedman, who joined last summer as part of the AI spending spree, to deliver meaningful revenue growth from the model and future releases, sources with knowledge of the matter said. Meta tech chief Andrew Bosworth, a 20-year company veteran and close confidant of Zuckerberg's, could take on a bigger role in AI if the newcomers are perceived as failing, the sources said.
Wang called Muse Spark an "appetizer" for what's to come and said there will be more powerful, "larger models." On the Core Memory podcast last month, Wang said, "One of the things that is very important to me is safety for these models." He dismissed any reported internal conflicts during the podcast appearance.
FAQ
What did Meta spend to bring in Alexandr Wang?
Meta spent over $14 billion in an investment that acquired roughly half of Scale AI and brought Wang and his top lieutenants to lead the newly established Meta Superintelligence Labs in June of last year.
How has Meta's stock performed since the AI investment?
Meta's stock declined 18% over the past 12 months, making it the worst performer in the megacap group along with Microsoft, despite the company reporting 33% revenue growth in the first quarter.
When did Meta release the Muse Spark AI model?
Meta released the Muse Spark AI model in April, marking the company's first proprietary foundation model and departure from its open-source Llama approach.
