Meta (NASDAQ: META | META Price Prediction) founder and CEO Mark Zuckerberg has just done the rounds of the business press complaining about the way Anthropic and OpenAI rule the AI sector. Meta does not compete meaningfully at all at the top of the industry. Meta’s stock is down 10% this year, while the S&P 500 is 8% higher. Who wouldn’t be unhappy with his position? Who wouldn’t complain bitterly?
Zuckerberg told the FT that he wants the US market open to Chinese models. He wants these to be unregulated. The paper reports, ‘The remarks appeared to be a broadside against rivals Anthropic and OpenAI, which currently dominate the chatbot market with proprietary “closed” AI models.’ Of course he does. The chance he can catch up with their lead in the industry is nearly impossible.
Zuckerberg then stopped by The Wall Street Journal, which let him write an opinion piece. The Journal’s takeaway was that “With Meta’s AI model development lagging behind that of Anthropic and OpenAI, any across-the-board regulation on the speed of development could potentially lock in those companies’ leads.” He wants Washington to act to solve his problem. He took two days to publicly beg for a set of circumstances that would stop his company from falling further behind.
Meta needs help for another reason. It is loading up on debt, both on its own and with partners. Recently, Meta and BlackRock said they would spend $14 billion to build a data center. And that investment is a drop in the bucket. According to Yahoo Finance, “Meta now plans to spend $125 billion to $145 billion on capital expenditures in 2026 — a range the company raised by $10 billion at both ends in April, mostly for AI (artificial intelligence) infrastructure.” While investors have not panicked about this investment and those of similar size by the leaders in the AI race, they have become deeply anxious. Cash-rich mega-tech companies are dumping money into data centers which may never become profitable, and taking on staggering debt loads in the process.
The battle for the leader in the AI industry now appears to pit OpenAI and Anthropic against the rest of the industry. The sector’s arms merchant, Nvidia (NASDAQ: NVDA), has financial bets across the board based on loans and investments. The complaint about these is that the money is “round-tripped.” Nvidia passes out money to companies that then buy its chips. It is going to the racetrack and placing money on every horse.
Lost in the debate about AI primacy is whether any of these companies will ever make much money at all. With the cost of money for data centers, the return on investment a few years from now will need to be huge. And, there are reasons to think they will not. The list of challenges involves “free” AI from China, which, apparently, US companies have started to use. And many corporations have started to ask whether their own ambitions in AI are worth the cost at all.
Zuckerberg will talk to anyone about his viewpoint. If he is not successful, the drop in Meta’s share price this year will just be the start of a longer and deeper downturn.
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