NEW YORK/SAN FRANCISCO: Meta is considering sweeping layoffs that could affect 20 percent or more of its workforce as the company seeks to offset the soaring costs of artificial intelligence investments and streamline operations, three sources familiar with the matter told Reuters.

No final decision has been made, and a timeline for the cuts has not yet been set, the sources said. Senior executives have recently alerted other leaders inside the company to begin planning how teams could be reduced, according to two of the people.

The sources spoke on condition of anonymity because they were not authorised to discuss the plans publicly.

"This is speculative reporting about theoretical approaches," Meta spokesperson Andy Stone said in response to questions about the plan.

If Meta ultimately proceeds with layoffs of that scale, it would mark the company's largest workforce reduction since its restructuring drive in late 2022 and early 2023, which it described as the "year of efficiency." The company had nearly 79,000 employees as of December 31, according to its latest filing.

Meta cut about 11,000 jobs in November 2022, roughly 13 percent of its workforce at the time, and announced another 10,000 layoffs around four months later.

AI Investments Driving Strategy

Chief Executive Mark Zuckerberg has spent the past year pushing the company to accelerate its push into generative artificial intelligence.

Meta has been offering lucrative compensation packages, some reportedly worth hundreds of millions of dollars over four years, to recruit top AI researchers to a new "superintelligence" team.

The company has also announced plans to invest US$600 billion by 2028 to expand its data centre infrastructure.

Earlier this week, Meta acquired Moltbook, a social networking platform built for AI agents. The company is also spending at least $2 billion to purchase Chinese AI startup Manus, it was previously reported.

Zuckerberg has suggested the company's growing AI capabilities could lead to significant efficiency gains. In January, he said he was beginning to see "projects that used to require big teams now be accomplished by a single very talented person."

Broader Tech Industry Trend

Meta's potential layoffs reflect a broader trend among large technology companies as advances in artificial intelligence allow firms to operate with smaller teams.

Several major companies have already announced workforce reductions this year.

Amazon said in January it would cut about 16,000 jobs, nearly 10 percent of its workforce. Fintech firm Block reduced nearly half of its staff last month, with CEO Jack Dorsey citing the increasing capabilities of AI tools that allow companies to do more with fewer employees.

Challenges in AI Development

Meta's aggressive investment in AI follows a difficult year for its Llama 4 model family.

The company faced criticism that early versions of the models produced misleading benchmark results. It later cancelled plans to release the largest version of the model, known as Behemoth, which had been expected last summer.

Meta's superintelligence team has been working on a new AI model called Avocado to restore its standing in the rapidly evolving AI sector, though its performance has so far fallen short of expectations.