Meta's Multi-Pronged Strategy to Dominate AI Lane
According to reports, Meta Platforms (META.US) has been in talks with AI video company Pika regarding a potential acquisition or technology licensing deal. The report also notes that the social media giant has had discussions with major image and video generation app Higgsfield for an acquisition, but those talks have ceased for now.
It is known that Meta has actively pursued AI-related transactions since the beginning of this year. In June, Meta acquired a 49% stake in data platform Scale AI for nearly $15 billion, subsequently appointing Alexandr Wang, CEO of Scale, as Meta's AI lead. Additionally, Meta acquired small AI voice generation startup PlayAI in July, which specializes in human-like voice generation, but the transaction terms were not disclosed. Prior to this, Meta had attempted to acquire Perplexity AI, Runway AI, and FuriosaAI.
Meanwhile, Meta has also been recruiting top AI talent from competitors like Google (GOOGL.US), OpenAI, and Apple (AAPL.US) by offering massive salaries. This effort aims to build a powerful "Meta Superintelligence Labs" team. In July alone, Meta lured multiple researchers from OpenAI, including Shengjia Zhao, Jiahui Yu, Shuchao Bi, Hongyu Ren, Lucas Beyer, Alexander Kolesnikov, and Xiaohua Zhai. Additionally, Meta recruited Daniel Gross, CEO of Safe Superintelligence, and former GitHub CEO Nat Friedman to join the MSL team.
To support its superintelligence plan, Meta is seeking $29 billion in funding, with $3 billion coming from private equity firms like Apollo Global Management (APO.US), KKR (KKR.US), Brookfield (BAM.US), Carlyle Group (CG.US), and Pimco. The remaining $26 billion will be raised through debt financing.
Notably, Meta recently announced strong second-quarter earnings and guidance for the third quarter, indicating that the tech giant's advertising business remains rapidly growing, sufficient to support its massive AI expenditures. Data shows that Meta's second-quarter revenue reached $475.2 billion, a 22% year-over-year increase, exceeding market expectations; diluted EPS was $7.14, up 38%, also beating market expectations.
Furthermore, Meta has raised its capital expenditure forecast range for 2025 due to continued investments in talent, infrastructure, data centers, and energy to maintain competitiveness in the rapidly developing AI landscape. The company currently expects this year's expenditures to be between $66 billion and $72 billion.
According to Hargreaves Lansdown stock analyst Matt Britzman, "These expenditures will have a certain impact on the company's profitability in the short term, but from a long-term perspective, Meta has the potential to become a clear winner in the AI field." He notes that Meta's second-quarter performance was "extremely impressive," partly due to improvements in AI allowing the company to increase the average price of its ads.