Reality Labs Is Losing Billions, but Meta Is All-In on AI
Meta’s Reality Labs, responsible for developing metaverse technologies, remains deep in the red. In 2024 alone, operating losses reached $17.7 billion, a 10% increase from the previous year.
Since 2020, Reality Labs’ total losses have exceeded $60 billion, despite ongoing investments in the development of Quest VR headsets and the Horizon Worlds platform.
Meta’s Q4 2024 earnings report, released in late January, showed that Reality Labs generated just over $1 billion in revenue, while quarterly losses hit $4.97 billion. Still, Mark Zuckerberg remains optimistic, insisting that 2025 will be a breakthrough year for the metaverse and augmented reality (AR) technologies. According to him, engagement with Meta’s AR and VR products is steadily increasing.
“This is a year when a number of the long-term investments that we’ve been working on, that will make the metaverse more visually stunning and inspiring, will really start to land,” Zuckerberg told investors during a call.
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Meta’s Reality Labs division is becoming increasingly aligned with the company’s AI initiatives. Mark Zuckerberg believes 2025 will be a pivotal year not only for the metaverse but also for AI, as Meta plans to invest between $60 billion and $65 billion in AI applications and the construction of a 2-gigawatt data center.
Despite Reality Labs' ongoing losses, Meta’s overall financial performance remains strong. In Q4 2024, the company reported $48.4 billion in revenue, marking a 21% year-over-year increase. Annual revenue climbed to $164.5 billion, up 22% from 2023. However, advertising continues to be Meta’s primary revenue source, just as it was the year before.
Investor sentiment was highly positive following the earnings report—Meta’s stock rose 5%, reaching $676.50 per share. Since the beginning of 2024, shares have gained more than 15%.
Beyond its large-scale AI investments, Zuckerberg anticipates a rapid rise in AI-powered digital assistants, referred to as DeFAI (Decentralized AI agents). Meta projects that by 2025, these AI assistants will surpass 1 billion users.
Zuckerberg also expressed confidence that Meta AI will emerge as the leading platform for user interaction with artificial intelligence.
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