Meta’s AI Push Is Driving Layoffs

Earlier this week Meta (Nasdaq: META) announced its first quarter results that outpaced the market. But disappointing usage metrics sent the stock down 7% in the after-hours trading session.

Meta’s Financials

Meta’s first quarter revenues grew 33% to $56.3 billion, ahead of the Street’s expected $55.5 billion. EPS of $7.31 was ahead of the market’s estimate of $6.79.

Advertising revenues grew 33% to $55 billion. Revenue from family of apps grew 74% to $885 million driven by WhatsApp paid messaging and subscriptions.

Reality Labs revenues were down 2% to $402 million due to lower Quest headset sales.

While the financials were impressive, the market was not pleased with the declining usage metrics. Daily active people grew 4% over the year to 3.56 billion, falling short of the analyst expectations of 3.62 billion. Meta attributed the lower-than-expected usage to the internet restriction on access to WhatsApp in Russia and Iran.

For the current quarter, Meta expects revenues of $58-$61 billion, compared with analyst estimates of $59.5 billion. For the year, it increased its capex spending estimate to $125-$145 billion, compared with an earlier estimate of $115-$135 billion. The increased capex expectation was driven more by the higher component pricing this year than by additional costs to support future capacity. Meta is also worried about the increased regulatory concerns across the globe.

Meta’s stock is trading at $669.12 with a market capitalization of $1.5 trillion. It hit a 52-week high of $796.25 in August and has climbed from the 52-week low of $520.26 that it had fallen to in April.

Meta’s AI Model

Earlier this month, Meta released Muse Spark, the first LLM built by its Superintelligence Labs. Muse Spark is the first model in its new Muse series which is a deliberate and scientific approach to model scaling where each generation validates and builds on the last. The initial model is small and is a foundation model being used for the next generation which is already in development. Muse Spark powers the Meta AI assistant in the Meta AI app and meta.ai and is built to support complex reasoning and multimodal tasks. Muse Spark allows users to switch between modes depending on the task.

Meta AI can launch multiple subagents in parallel to address user questions. For instance, a user can leverage AI to plan a family trip where one agent will simultaneously draft the itinerary, another will compare prices and a third will find the activities, giving the user a more consolidated and a faster answer. Muse Spark also allows Meta AI to improve health navigation by providing more detailed responses, including questions involving images and charts. Meta is also opening access to the technology. It will be available in private preview via API to select partners, and Meta is planning for open-source future versions of the model.

Layoffs at Meta

Meta ended the quarter with headcount rising 1% over the year to nearly 78,000. But Meta, like other tech players, continues to rationalize headcount to “offset the other investments we’re making.” Earlier this month, it announced plans to lay off 10% of its workers, and it removed 6,000 open roles.

As of April 2026, the global tech industry has recorded 78,557 layoffs, with 76.7% occurring in U.S. companies. While giants like Oracle (ORCL) (25,000+), Amazon (AMZN) (16,000), and Block (4,000) lead the charge, a disturbing pattern has emerged.

According to research by Alan Cohen (RationalFX), nearly half of these job losses are now explicitly tied to “AI Restructuring.” However, a deeper analysis suggests that AI is often being used as an “AI-as-an-excuse” narrative to justify aggressive cost-cutting and boost sagging stock prices. Companies like Oracle have automated the termination process itself, firing thousands via 6:00 AM emails—a cold-blooded approach that reflects a total deficit of empathy and human kindness.