Meta’s AI Gamble Gets Bigger After the Company Considered Slashing Teams Again. What That Means for META Stock
Meta Platforms (META) stock is facing a fresh test after Reuters reported that the social-media giant explored cutting the size of some teams by as much as 60% as part of an aggressive AI restructuring effort.
The plan, known internally as Project OT, or Organization Transformation, was designed to make Meta more "AI native" by replacing some traditional roles with AI-powered workflows and smaller teams. In May, Meta eliminated about 8,000 jobs, or roughly 10% of its workforce while shelving a planned second round of cuts after internal productivity results and employee resistance raised concerns.
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For investors, the episode offers an important glimpse into the lengths in which CEO Mark Zuckerberg is willing to push Meta in the race for artificial intelligence.
Project OT report was less about immediate layoffs and more about Meta's strategy.
Management clearly believes AI can fundamentally change the company operations. Smaller teams, fewer management layers, and AI agents handling routine work could eventually improve productivity and operating leverage.
But the experiment also revealed the risks. Reuters reported that internal metrics suggested Meta's AI tools were not delivering the expected productivity gains, while reliability issues and employee backlash complicated the rollout. Therefore, Meta pulled back from another planned round of cuts.
For shareholders, that is both a warning and a potential positive. Meta is making a huge AI bet, but management appears willing to adjust when the technology does not yet deliver. That could reduce the risk of sacrificing productivity simply to meet aggressive automation targets.
Meta stock is down 12.6% year-to-date (YTD) and 23.2% over the past 52 weeks. The weakness comes as investors digest Meta's enormous AI investment cycle. The company is spending heavily on data centers, computing infrastructure, and chips while also absorbing substantial legal and restructuring costs.
That pressure showed up clearly in the second quarter. Meta's costs and expenses jumped 55% year-over-year (YOY), far faster than revenue, while capital expenditures reached $31.08 billion.
Despite the sell-off, Meta's valuation has become less demanding. META is trading at 19.28 times trailing price-to-earnings, with a price-to-sales ratio of 6.33 times and a price-to-cash-flow multiple 11.17 times.
That matters because Meta is still producing substantial growth. Investors are effectively being asked to pay around 19 times earnings for a company generating double-digit revenue growth while aggressively building an AI platform that could create additional monetization opportunities.
Meta is also pushing deeper into AI-powered wearables. The company and EssilorLuxottica (ESLOY) launched Meta Glasses in Japan on Aug. 26, with 26 styles starting at 50,600 yen. Meta says the new glasses build on its existing AI glasses technology and are designed around an always-available AI assistant.
The latest data shows META carries a consensus "Strong Buy" rating based on 55 analysts. The mean price target is $751.08, implying 30.7% upside from the current share price, while the Street-high target of $1,000 points to potential upside of 74%.
That bullish view is notable given the stock's recent weakness.
Some analysts remain focused on the eventual payoff from Meta's AI spending, while others are watching free cash flow and the pace of capital investment more closely. For now, Wall Street appears to believe the current pressure is largely the price Meta is paying to strengthen its position in the next phase of computing.
