Tech giant Meta has hit the brakes on its aggressive Artificial Intelligence expansion, instituting a hiring freeze across its AI division as scrutiny mounts over the scale of its multibillion-dollar investment.
A Meta spokesperson confirmed the hiring pause, calling it “basic organizational planning, creating a solid structure for the new superintelligence efforts after bringing people on board and undertaking yearly budgeting and planning exercises.”
The move, first reported by The Wall Street Journal, signals a shift in strategy for the tech giant, which has been racing to build a superintelligence that could rival human cognition. Analysts say the freeze reflects growing concerns from investors and industry watchers about whether Meta can sustain its ambitious spending spree in the face of rising costs and intensifying competition.
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The freeze, which also bars internal transfers, could make exceptions for external hires approved by Chief AI Officer Alexandr Wang. A Meta spokesperson described the move as routine planning to solidify the structure of its AI labs following a major hiring push and annual budgeting exercises.
Meta’s aggressive AI hiring, including poaching top talent from other AI companies like OpenAI, Alphabet’s (GOOGL) Google, iPhone maker Apple (AAPL), and Anthropic, has been under intense scrutiny. The company had recently added more than 50 researchers and engineers as part of its effort to develop a superintelligence system.
The tech giant’s strategy involved offering massive compensation packages, with reports of signing bonuses up to $100 million and total compensation packages reaching $300 million over four years, including equity that vests immediately in the first year. CEO Mark Zuckerberg has also personally engaged in recruitment, contacting candidates directly and forming a “Recruiting Party” WhatsApp group with senior executives to strategize hires.
The company’s hiring spree, however attracted criticism from several tech CEO and experts. OpenAI CEO Sam Altman publicly criticized Meta’s tactics, calling the $100 million signing bonuses “crazy” and suggesting they prioritize money over mission, potentially leading to cultural issues.
Also, OpenAI’s Chief Research Officer, Mark Chen, likened the talent loss to a “home robbery” in an internal memo, emphasizing efforts to recalibrate compensation to retain staff while maintaining fairness. Despite these efforts, OpenAI has lost at least eight researchers to Meta in recent months.
Notably, analysts have raised concerns due to pay packages worth nine figures and the risk to shareholder returns from the growing stock-based compensation costs. It is understood that Meta has offered packages exceeding $100 million, with some reaching $300 million over four years, including signing bonuses up to $100 million and immediately vesting equity. For example, hires like Shengjia Zhao and Ruoming Pang reportedly received such deals. These costs significantly inflate Meta’s SBC expenses, which grew 33% year-over-year to $8.9 billion in Q2 2025, according to recent financial reports.
Analysts warn that the rapid increase in SBC dilutes existing shareholders’ equity, as new shares are issued to cover these packages. This could pressure Meta’s stock price if the AI investments don’t yield proportional returns. With Meta’s $14.3 billion investment in AI initiatives like Scale AI and no immediate AGI breakthroughs, investors are skeptical about short-term profitability.
Also, the high cost of talent acquisition, combined with Meta’s broader AI infrastructure spending (e.g., data centers and GPU purchases), raises questions about the company’s ability to balance growth with fiscal discipline. Analysts from firms like Bernstein and Morgan Stanley have noted that Meta’s AI spending, including SBC, could strain free cash flow if revenue from AI products like Llama or future AGI models doesn’t materialize soon.
The recent pause in Meta’s AI hiring is seen as an attempt to address these concerns and stabilize costs. The decision comes as it faces mounting scrutiny over its AI spending.
Why it matters
Organizational Restructuring:
Meta is reorganizing its AI division into four units under the Meta Superintelligence Labs, including a “TBD Lab” for superintelligence, an AI products division, an infrastructure group, and a long-term research unit. The pause aligns with this restructuring to integrate over 50 high-profile hires from rivals like OpenAI and Google, many secured with nine-figure compensation packages. The company described this as “basic organizational planning” to stabilize its structure post-hiring spree.
Signal of Strategic Caution:
The freeze suggests Meta is moving from a phase of aggressive expansion to a “digestion mode,” focusing on optimizing its existing talent and resources before further investments. This could indicate a more disciplined approach to AI development, potentially leading to a leaner, more effective strategy, but it also risks a short-term slowdown in research momentum.
Meta’s pause is a recalibration to address investor concerns and market dynamics while consolidating its AI strategy.
Looking Ahead
Meta is well-positioned to compete in the AI race due to its elite talent, open-source strategy, and vast data resources. The current pause, if executed effectively, could strengthen its foundation by fostering a leaner, more focused AI division.