Archive — US — techcrunch
Meta is still burning money on AR/VR
Meta reported a $4 billion loss at Reality Labs, amassing $83.5 billion in losses since 2021. Despite this, it posted a net income of $26.8 billion in Q1, driven by increased revenue. As it pivots from the metaverse to AI ambitions, projected spending on AI will reach $125-$145 billion by 2026. Investors express concerns about the ongoing losses, leading to a 5% drop in stock value post-earnings announcement.
Key points
- Meta's Reality Labs lost $4 billion this quarter, totaling $83.5 billion since 2021.
- The average quarterly loss for Reality Labs is $4 billion, viewed as a trend.
- Meta's net income rose to $26.8 billion in Q1 2023, a 61% increase year-over-year.
- Projected spending on AI will exceed analyst expectations, reaching $125-$145 billion by 2026.
- Meta CEO Mark Zuckerberg mentions increased infrastructure spending due to component cost rises.
- Meta is transitioning focus from metaverse development to AI, with mixed investor reactions.
Why it matters
- The ongoing losses at Meta reflect broader trends in tech companies' investments in emerging technologies.
- AI spending is poised to become a crucial area for competitiveness among major tech firms.
- Meta's shift from metaverse to AI is in line with a trend where companies pivot towards high-demand technologies.
- 2025 is projected to see intensified competition in AI, impacting R&D expenditures and stock valuations.
Meta's significant financial losses at Reality Labs juxtaposed with strong earnings highlight a strategic pivot to AI, amid rising costs and investor apprehension, reflecting broader trends in the tech industry as companies face pressure to innovate.