3 - 6 minute read
Meta, the social media giant led by Mark Zuckerberg, reported a $4 billion loss from its metaverse unit, Reality Labs, in the first quarter of 2023. Despite this setback, the company still managed to post a final profit of $5.7 billion. The loss follows a $14 billion loss in 2022, and Zuckerberg predicts that Reality Labs will continue to suffer losses throughout the rest of 2023.
However, the losses suffered by Reality Labs were offset by the company’s developments in its artificial intelligence (AI) segment. Zuckerberg explained that the firm’s AI work is driving good results across its apps and business, and that the company is becoming more efficient so that it can build better products faster. This puts the company in a stronger position to deliver its long-term vision.
Zuckerberg recently labeled AI as the company’s “single largest investment,” but he also made it clear that Meta’s metaverse ambitions remain a top priority. He said, “A narrative has developed that we’re somehow moving away from focusing on the metaverse vision, so I just want to say up front that that’s not accurate.” He added that the company has been focusing on both AI and the metaverse for years now and will continue to do so.
Zuckerberg also explained that metaverse technology will help deliver AI as well. For example, embodying AI agents will take advantage of the deep investment that the company has made in avatars over the last several years.
“Our AI work is driving good results across our apps and business. We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long-term vision.”
In a February 28 Facebook post, Zuckerberg stated that the firm is building a suite of creative and expressive tools that can help “turbocharge” the efficiencies of some of its existing products. He said that over the longer term, the company will focus on developing AI personas that can help people in a variety of ways. The company is exploring experiences with text (like chat in WhatsApp and Messenger), with images (like creative Instagram filters and ad formats), and with video and multi-modal experiences.
The Bottom Line
Meta’s $4 billion loss from its metaverse unit, Reality Labs, in the first quarter of 2023 may have caused concern among investors, but the company’s developments in its AI segment show promise. Zuckerberg has made it clear that Meta’s metaverse ambitions remain a top priority, and the company’s investments in both AI and the metaverse will continue. Traders should keep an eye on Meta’s progress in both areas, as they will likely have a significant impact on the company’s future market moves.
