Some analysts say the pause could signal trouble in the sector, warning it may be in a bubble
Visitors take photos in front of the Meta sign at its headquarters in Menlo Park, California, US, December 29, 2022. © Getty Images / Tayfun Coskun/Anadolu Agency
Facebook parent company Meta has paused hiring for its new artificial intelligence (AI) division, the company told CNBC on Thursday.
Meta has been among the most aggressive recruiters in the AI race, luring talent from rivals with massive pay packages and acquiring startups to onboard specialists.
The hiring freeze was first reported by the Wall Street Journal, which said it was announced last week amid a major reorganization of Meta’s AI arm. The division was split into four teams: building machine superintelligence, AI products, infrastructure, and long-term research. Staff transfers between teams have been restricted, with external hiring now requiring approval from Meta’s chief AI officer, Alexandr Wang.
A Meta spokesperson confirmed the pause and said it stemmed from “basic organizational planning,” including onboarding and annual budgeting.
Meta has spent heavily on AI this year, hiring over 50 specialists. Some were reportedly offered signing bonuses of up to $100 million. To bring on Wang, founder of data labeling startup Scale AI, Meta bought a 49% stake in his company for $14.3 billion. Other tech firms have also been pouring billions into both AI talent and development, including Microsoft, Amazon, and Alphabet, public filings show.
Analysts have warned that such heavy spending may erode shareholder returns. In a recent research note seen by the WSJ, Morgan Stanley analysts said rising stock-based compensation could backfire if results disappoint, warning that lavish salaries risk diluting shareholder value without any clear innovation gains.
Some experts also warn AI investment is growing too fast. OpenAI CEO Sam Altman told The Verge last week that market conditions now resemble the dot-com bubble of the 1990s, when overvalued internet stocks collapsed. Similar warnings have been voiced by Alibaba co-founder Joe Tsai, Bridgewater’s Ray Dalio, and Apollo Global Management’s Torsten Slok.
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Others, however, argue fears of an AI bubble are overblown. Wedbush analyst Dan Ives told CNBC that tech stocks remain “undervalued,” and Meta’s hiring pause is just an organizational reset. Daniel Newman, CEO of Futurum Group, agreed, calling the freeze a “natural resting point” as Meta integrates new talent.