Meta is still burning money on AR/VR
When Meta released its quarterly earnings report on Wednesday evening, a colleague pointed out how Meta lost $4 billion on Reality Labs, the division responsible for its AR glasses, VR headsets, and VR software. Over its last 21 quarterly earnings reports, dating back to 2021, Meta has lost a total of $83.5 billion on Reality Labs, which comes out to an average of about $4 billion in losses each quarter. In the first quarter of this year, the social media giant posted a net income of $26.8 billion, up 61% over the year prior; revenue also increased 33% year-over-year to $56.3 billion.
Meta projected that it will spend between $125 billion and $145 billion in 2026, exceeding analysts’ projections and Meta’s previous estimates . “We are increasing our infrastructure capex forecast for this year,” Meta CEO Mark Zuckerberg said on a public call with investors on Wednesday. “Most of that is due to higher component costs, particularly memory pricing […] We are very focused on increasing the efficiency of our investments .” Meta also spent a lot of money to build a metaverse that no one really wanted or cared about. The response wasn’t reassuring. “We aren’t providing a specific outlook for 2027 capex, and we are, frankly, undergoing a very dynamic planning process ourselves as we’re working through what our capacity needs will be over the coming years,” replied Meta CFO Susan Li. “Our experience so far has been that we have continued to underestimate our compute needs.” So, despite its impressive quarterly results, Meta’s investors aren’t thrilled. OpenAI ends Microsoft legal peril over its $50B Amazon deal DeepMind’s David Silver just raised $1.1B to build an AI that learns without human data The Stanford freshmen who want to rule the world … will probably read this book and try even harder Two college kids raise a $5.1 million pre-seed to build an AI social network in iMessage Meta’s loss is Thinking Machines’ gain Google to invest up to $40B in Anthropic in cash and compute OpenAI releases GPT-5.5, bringing company one step closer to an AI ‘super app’
Analysis: Why This Matters
Reality Labs updates are leading indicators — what looks like a small change today often becomes an industry-wide shift tomorrow.
Key Takeaways
- She holds a B.A. in English from the University of Pennsylvania and served as a Princeton in Asia Fellow in Laos.
- When Meta released its quarterly earnings report on Wednesday evening, a colleague pointed out how Meta lost $4 billion on Reality Labs, the division responsible for its AR glasses, VR headsets, and VR software.
- She has also written for publications like Polygon, MTV, the Kenyon Review, NPR, and Business Insider.
Expect product, hiring, and pricing reactions across the sector in the coming weeks.
Source: TechCrunch