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Meta's Internal Turmoil: Morale Nears 20-Year Low at the Wrong TimeWritten by Leo Miller on June 24, 2026 
Key Points
- Investors are looking for Meta Platforms to accelerate its development of AI products as capital expenditures climb.
- Meanwhile, reports indicate that employees are struggling with its AI restructuring, putting morale near two-decade lows.
- Still, the company's impressive growth and latest model provide clear evidence of AI achievement.
- Special Report: Musk just raised $75 billion. Guess what he needs to buy.
Meta Platform’s (NASDAQ: META) last earnings report disappointed investors, leading shares to fall more than 8% to $611 afterward. This drop has so far indicated the start of a larger slide for the stock, as Meta has continued to tumble, recently falling below $575. The company’s increased capital expenditure guidance was the main culprit for that initial drop. Additionally, although Meta grew revenue by 33% year over year (YOY), the company did not make any substantial artificial intelligence product announcements, which likely added fuel for the bears. Unfortunately, as Meta looks to roll out such offerings, there appears to be significant internal turmoil at the company. Meta's Chief Technology Officer (CTO) recently made stark comments about employee morale, and a top AI executive recently left the firm. While this may seem innocuous at first, it is important to remember that an investment in any stock is also an implicit bet on the people behind the ticker. Meta’s internal struggles are worth paying attention to, especially given the company’s current position. At the same time, Meta Platforms has made tangible progress with its AI strategy, and the machine won’t stop chugging amid the noise.
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Morale Nears Basement Levels as Investors Eye AI Product DevelopmentThe question surrounding Meta in 2026 is whether it can justify hundreds of billions in AI spending based on advertising optimization alone. This creates a need for the company to develop other AI products to drive growth. Against this backdrop, Meta recently laid off 10% of its employees, aimed at helping it cut down costs as AI spending rides higher. Just as significant was the company’s move to reallocate 10% of its remaining workforce to AI-related positions. This could allow the firm to more quickly develop the alternate AI revenue sources investors are watching for. In that context, recent comments made by CTO Andrew Bosworth are somewhat concerning. In an internal meeting, Bosworth said employee morale is “maybe not the worst it’s ever been in 20 years here, but it’s probably up there. It’s definitely up there,” per Business Insider. In a staff memo, Bosworth also called Meta’s explanation of its AI restructuring to employees "atrocious." For a company facing pressure to offset its AI spending with AI growth, employee morale sitting near a 20-year low is unlikely to help its mission. This is further exacerbated by the AI component of the restructuring, which appears to be a significant driver of dissatisfaction. Meta has undergone large-scale layoffs before, but this was the first time AI played a significant role in such a move. Adding to the list of investor concerns is the departure of Emily Dalton Smith. Meta assigned Smith the task of leading improvements in internal AI usage among its employees. However, after only about two months in this role, Smith is leaving the Magnificent Seven company following a 10-year overall stint. While a single departure does not make or break a company, this suggests that even high-up, long-standing employees are unhappy with Meta’s AI shakeup. Meta’s AI Successes: Sky-High Advertising Growth & Muse Spark DevelopmentDespite this, it is worth detailing the important successes that Meta has achieved recently. As noted, Meta’s growth hit 33% YOY last quarter. This was the company’s fastest growth rate in four years and a huge acceleration compared to 24% YOY growth in the prior quarter. Excluding pandemic-era spikes in revenue growth seen as people spent more time online, Meta’s growth last quarter was its fastest since 2018. This is largely a product of Meta's use of AI to improve its ranking and recommendation algorithms. Increasingly, its apps are showing users content and ads they are more likely to engage with, boosting growth. Furthermore, Meta released its latest Muse Spark model in April. According to AI model evaluation site Artificial Analysis, Muse Spark is by far the company’s most intelligent model. On its Intelligence Index, Muse Spark currently holds a score of 43. This is more than three times higher than Meta’s previous model Llama 4 Maverick, which has a score of 14. However, Muse Spark is still well behind Anthropic and OpenAI’s top models, which have scores of 55 to 60. Nonetheless, Meta has dramatically improved its top model. Furthermore, Muse Spark’s score is now within spitting distance of Alphabet’s (NASDAQ: GOOGL) top model, Gemini 3.1 Pro Preview, which has a score of 46. Importantly, the shift came just 10 months after Meta hired Alexandr Wang as its first Chief AI Officer. This demonstrates that Meta can still improve quickly—providing confidence that it can do the same going forward.
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Meta: Clear AI Wins Overshadow Morale ConcernsMeta’s internal turmoil is not exactly what investors want to see as the company aims to provide new revenue-generating AI products. Infighting could delay that development exactly when Meta needs to accelerate it. Still, the huge improvement in top-line growth and the quick turnaround of Muse Spark are testaments to the company's AI success. While internal issues may slow it down, they are very unlikely to stop Meta from delivering key AI improvements in the long term. Notably, as Meta shares have slid, Wall Street analysts continue to take a bullish outlook on the stock. The MarketBeat consensus price target of $840 implies upside of about 50%. Read this article online › Featured Articles
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