Meta is still burning cash on AR/VR

When Meta released his quarterly earnings report On Wednesday evening, a friend revealed how Meta lost $4 billion on Reality Labs, the division that oversees its AR glasses, VR headsets, and VR software.

I yawned at first. Meta is losing $4 billion on Reality Labs alone he didn’t it seems amazing. It’s a given. Reality Labs also lost $4 billion, and the sky is blue.

Then I realized, that in itself is known – for Meta, the losses in this section are very good. In its last 21 quarterly reports, through 2021, Meta has lost $83.5 billion on Reality Labs, which comes to about $4 billion in quarterly losses. That’s a banana!

What’s even more surprising is that when the Meta moves away from its inflexible desires, its use of AI will be astronomical.

Of course, it’s not like Meta doesn’t have money. In the first quarter of this year, the social media giant posted $26.8 billion in revenue, up 61% from last year; revenue also rose 33% year over year to $56.3 billion.

But despite its launch on social media, Meta’s goal is to remain competitive with AI leaders such as OpenAI and Anthropic. Trim expected that it will cost between $ 125 billion and $ 145 billion in 2026, exceeding what analysts think and Meta’s past. comparison.

“We’re going to expand on that information this year,” Meta CEO Mark Zuckerberg said in a conference call with investors on Wednesday. “A lot of this is due to the high cost of things, especially memory prices (…) We are focused on expansion The efficiency of our investment.”

Meta also spent a lot of money to create a metaverse that no one wanted or cared about. It will take a lot of money to develop the advanced AI that (probably some) people want. Last year, Meta made the most expensive hire, chasing 50 AI researchers and engineers from competitors, who helped the company deploy its new AI model, Muse Sparkearlier this month. While CEO Mark Zuckerberg reported a “significant increase” in the use of Meta AI since its release, it’s just getting started expensive building and maintaining AI products.

On the earnings call, an investor involved asked if Meta would provide guidance on its 2027 earnings. The answer was not encouraging.

“We are not giving an exact figure for 2027 capex, and, frankly, we have a plan to prepare ourselves as we work on what we need in the coming years,” answered Meta CFO Susan Li. “Our experience so far has been that we continue to ignore our needs.”

So, despite its impressive quarterly results, Meta investors are not happy. Sales dropped more than 5% in after-hours sales.