Meta Expands AI Investments as Metaverse Losses Continue
Meta's Reality Labs division has incurred over $60 billion in losses since 2020, with a recent quarterly loss of $5 billion. Despite this, CEO Mark Zuckerberg maintains optimism, declaring 2023 a "pivotal year" for the metaverse.
Reality Labs, responsible for Meta's Quest VR headsets and Ray-Ban smart glasses, saw a 1% revenue increase driven by hardware sales. However, expenses have surged, raising concerns among analysts about the metaverse's profitability.
Despite meeting sales and user targets, former Reality Labs executives question the high cost of hardware production and the lack of cost-reduction efforts. Meta's dominance in the VR/AR market remains strong, with a 70% share.
Zuckerberg has announced a $60-65 billion investment in AI, citing a competitive advantage in an American standard. The move comes after a Chinese startup launched an AI model with lower development costs.
Analysts remain optimistic about Meta's AI efforts, with Jefferies analyst Brent Thill maintaining a Buy rating and a $715 price target. They emphasize AI's role in driving revenue growth and monetization.
Recent political developments include a $25 million settlement between Meta and former President Trump. The agreement stems from a 2021 lawsuit regarding the suspension of Trump's social media accounts.