Bearish Shock! Plunge in the Dead of Night! 437 Billion Yuan Evaporated Overnight - What Happened to AI Giants?

AI Giants Reported Massive Layoffs!

On Friday, U.S. stock markets saw Meta’s stock plummet nearly 4%, with its market value evaporating by $61.9 billion (about 437 billion RMB) in a single day. The company’s total market capitalization shrank to $1.55 trillion (about 10.690 trillion RMB).

That day, there were reports that Meta plans to cut 20% or more of its workforce to cope with soaring AI costs. As of the end of last year, Meta employed nearly 79,000 people.

Meanwhile, Elon Musk’s xAI is also experiencing turbulence, with several co-founders leaving the company. Out of 12 co-founders, only two remain. Additionally, xAI’s highly anticipated AI agent project Macrohard has reportedly stalled.

Meta May Cut at Least 20% of Its Workforce

According to Reuters, multiple insiders revealed that Meta is planning large-scale layoffs affecting possibly 20% or more of its total staff. The move aims to offset high investments in AI infrastructure and prepare for a transformation driven by AI-assisted tools that improve work efficiency.

Sources said the specific date for layoffs has not yet been determined, nor has the final scale. Two insiders stated that senior Meta executives have recently communicated the layoff plans to other senior managers, asking them to start developing reduction strategies. In response to these reports, Meta spokesperson Andy Stone said, “This is speculative reporting about theoretical plans.”

If Meta proceeds with a 20% cut, it would be the most significant personnel adjustment since the company’s “Efficiency Year” restructuring at the end of 2022 and early 2023. According to the latest financial report, as of December 31 last year, the company had nearly 79,000 employees. In November 2022, Meta laid off 11,000 employees (about 13% of its workforce at the time), and about four months later, announced another 10,000 layoffs.

Over the past year, CEO Mark Zuckerberg has continued to push Meta to strengthen its competitiveness in generative AI. The company has offered huge salaries—some reaching hundreds of millions of dollars over four years—to attract top AI researchers to a new superintelligence team.

Meta plans to invest $600 billion in data centers by 2028, and earlier this week, it acquired the social platform Moltbook, which targets AI agents. The company also spent at least $2 billion acquiring Chinese AI startup Manus.

Zuckerberg has hinted that these investments will lead to efficiency gains. In January, he stated he has seen “projects that previously required large teams can now be done by a single talented individual.”

Meta’s plans reflect a broader trend among large U.S. tech companies this year, where executives see recent improvements in AI systems as a key driver of transformation. Amazon confirmed layoffs of about 16,000 employees (roughly 10%) in January, and last month, fintech firm Block cut nearly half its staff, with CEO Jack Dorsey explicitly citing AI tools helping companies achieve higher output with leaner teams.

As Meta advances its AI investments, its Llama 4 model faced a series of setbacks last year, including criticism over misleading early benchmark results. The company abandoned its planned summer release of the largest version, “Behemoth.” This year, its superintelligence team has been working on a new model called “Avocado” to re-establish the company’s position, but its performance has also fallen short of expectations.

Turmoil at Elon Musk’s xAI

Billionaire Elon Musk’s AI startup xAI is experiencing turbulence, with several co-founders leaving and its Grok chatbot sparking controversy. Musk admitted that the company needs a deep restructuring.

Less than six weeks after SpaceX announced a $1.25 trillion merger deal with xAI, Musk acknowledged that the startup needs to “rebuild from the ground up.” He made this statement on social platform X as several co-founders left the company. On Thursday, xAI co-founder Guodong Zhang announced his departure, and fellow co-founder Haotian Liu also said he left earlier that week.

Of the 12 co-founders, only two remain. Musk said in a February all-hands meeting that some people are “more suited for the early stages of a company than for later stages.” However, reports indicate that some departing engineers are co-founding new projects, revealing internal conflicts within xAI. Media citing insiders said that management at SpaceX and Tesla has been asked to review xAI employees’ work and has already dismissed some staff.

On the evening of the 12th, Musk posted on X: “xAI was not built well the first time, so we are starting from zero and rebuilding completely. Tesla went through the same situation.”

However, with project leader co-founder Toby Pohlen leaving, xAI’s highly anticipated AI agent project Macrohard has reportedly stalled this week.

This personnel upheaval at xAI comes as SpaceX prepares for what could be a historic IPO. The recent merger valuation places SpaceX at $1 trillion and xAI at $250 billion. Meanwhile, the company is recruiting new engineers from startups like Cursor, including Andrew Millich and Jason Kingsberg, while also cutting jobs due to rapid progress by OpenAI and Anthropic in programming tools. Musk also admitted that some top candidates were missed during hiring and said he is reviewing past applications to reconnect.

xAI is also facing multiple controversies related to Grok chatbot and image generators, which have been accused of creating non-consensual synthetic images based on real photos. Despite ongoing disputes, the company has secured contracts with U.S. government agencies and continues investing in energy and data infrastructure in Memphis and other locations. Tesla is deepening cooperation by integrating Grok into vehicle systems and providing energy storage for xAI data centers.