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Meta in Talks to Invest Over $10 Billion in Scale AI
Broadcom’s AI boom faces limits despite soaring valuation
Algot Persson
June 08, 2025
In Today’s Issue:
Meta in talks to invest over $10 billion in Scale AI
Broadcom’s AI boom faces limits despite soaring valuation
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Meta in Talks to Invest Over $10 Billion in Scale AI
Alexandr Wang
Meta is in advanced talks to make a multibillion-dollar investment in AI data labeling startup Scale AI, potentially exceeding $10 billion, according to sources. The deal, still under negotiation, would be Meta’s largest external AI investment to date. Scale AI, whose clients include Microsoft and OpenAI, plays a critical role in training AI models by tagging and curating large datasets. The startup was last valued at $14 billion and could reach $25 billion in the proposed funding round. The move aligns with CEO Mark Zuckerberg’s strategy to prioritize AI, with Meta planning to spend up to $65 billion on AI initiatives this year. The investment would support Meta’s efforts to make its Llama model an industry standard and expand applications across platforms like Facebook, Instagram, and WhatsApp, where its AI chatbot now reaches 1 billion users monthly. Scale is also a growing defense tech player, recently partnering with the U.S. Department of Defense and working with Meta on “Defense Llama,” an AI model adapted for military use.
Broadcom’s AI boom faces limits despite soaring valuation
Broadcom has surged over 70% in the past two months, crossing a $1 trillion valuation, driven by its booming custom AI chip business, especially for clients like Google and Meta. AI chip revenue is projected at $5.1 billion this quarter, up 60% year-over-year, now comprising a third of total sales. However, risks are mounting. Custom chip development is costly and often underperforms Nvidia’s products. Google’s latest chips reportedly reach only half the performance of Nvidia's. Despite lower production costs, expensive optical networking and software development add complexity. Broadcom also faces intensifying competition from Marvell and MediaTek, as well as potential export restrictions, particularly due to ties with ByteDance. Analysts warn the custom-chip market is far smaller than Nvidia’s broader AI reach, projected to hit $500 billion by 2030. Valuation concerns loom large: Broadcom trades at a 33.6x forward P/E, above Nvidia and the broader semiconductor index. While well-positioned in AI, Broadcom’s path is narrower and more precarious than investors may assume.
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