Term Sheet | Fortune Human-assisted

Alexandr Wang, cofounder and CEO of Scale AI, in San Francisco on Aug. 8, 2019. (Photo: David Paul Morris/Bloomberg/Getty Images)

Meta is reportedly in talks to make a multibillion-dollar investment in Scale AI.

According to a Bloomberg report, the potential investment would be substantial enough to make it “one of the largest private company funding events of all time.” 

Scale AI was valued last year at $13.8 billion. The company was reported earlier this year to be working on a deal that would value it at $25 billion.

The San Francisco startup, cofounded by Quora veterans Alexandr Wang and Lucy Guo in 2016, prepares corporate data for use in artificial intelligence applications. 

The startup counts Cisco, General Motors, Microsoft, OpenAI, and yes, Meta as customers. Microsoft and Meta own stakes in the company.

Meta CEO Mark Zuckerberg has made no bones about making AI the company’s top priority in recent years, and the company has allocated $65 billion on such projects this year.

One note: Acquisitions have not been a major part of Meta’s AI plans to date. While peers Amazon, Alphabet, and Microsoft have invested billions in leading AI startups—Anthropic, OpenAI, etc—Meta has resisted.

That could soon change. Meta and Scale currently collaborate on a program focused on the use of Meta’s Llama AI model by the military; Meta recently announced a partnership with defense contractor Anduril on AI-powered equipment. —AN

It’s been a difficult week for Tesla. 

Not long after Elon Musk and President Donald Trump’s very-public social media spat led Tesla shares to take their greatest single-day drop ever on Thursday—erasing $152 billion off its market cap—one of Tesla’s top engineers confirmed on social media late Friday afternoon that he was leaving the company.

Milan Kovac, who oversaw the development of Tesla’s “Optimus” humanoid robot, posted on X that he had made “the most difficult decision of my life” and would be “moving out of my position.”

The departure is meaningful. Musk has claimed that the Optimus robot could generate “north of $10 trillion in revenue” for Tesla and be its biggest product ever. 

It’s largely his bullishness on these AI-powered initiatives that have contributed to Tesla’s soaring stock price, which some analysts have argued is divorced from reality. 

Kovac’s departure raises questions over the future direction of Optimus, and whether Tesla will successfully be able to develop, manufacture, and deliver the humanoid robots. 

Tesla had already been criticized for overselling the capabilities of Optimus after it failed to alert attendees of its launch event that humans were apparently remotely controlling the robots. (Kovac later confirmed the robots were human-assisted “to some extent.”)

Wall Street investment bank Goldman Sachs issued a note to investors on Thursday forecasting weaker-than-expected sales of Tesla cars in the second quarter. —Jessica Mathews

As Nintendo quickly sells out of its new portable Switch 2 gaming console, another gaming company has unveiled a new handheld device. 

Two, actually.

Microsoft and Asus have taken the wraps off two new Asus ROG Ally devices specifically tailored to Xbox. (“ROG” stands for “Republic of Gamers,” an Asus sub-brand.) 

Asus’ Ally handhelds generally allow you to play desktop games on the go, and can access titles on Steam, Xbox Game Pass, Epic, GOG, etc. 

The new models—the flagship Xbox Ally X and the cheaper Xbox Ally—have small tweaks to optimize for Xbox needs, such as a dedicated Xbox button for that app, optimized software settings, and on the other end, a full-screen Xbox experience on Windows that hides desktop complexity in favor of a handheld-optimized environment.

The differences between the two new models are principally internal. The Xbox Ally offers 720p gaming and an AMD Ryzen Z2 A chip while the Ally X variant offers 900p to 1080p, an AMD Ryzen AI Z2 Extreme chip, more memory and storage, and a larger battery to compensate for its brawnier chip. The X version also adds haptic sensors à la conventional Xbox controllers.

Both devices have the same seven-inch 1080p display with 120Hz refresh rate. Both offer access to PC games from various libraries, not just Xbox.

The companies did not share pricing information, but the devices are expected in time for this year’s holiday season. —AN