The chances of success are still unclear – but founder and boss Mark <a href="https://www.archyde.com/what-does-mark-zuckerberg-the-creator-of-facebook-spend-his-fortune-on/" title="What does Mark Zuckerberg, the creator of Facebook, spend his fortune on?”>Zuckerberg is spending more and more money on it in the hope of staying ahead of the competition.
Long-term investments will amount to at least 38 billion dollars (a good 35 billion euros) this year, including for the expansion of data centers for AI – a billion more than previously expected. And spending is expected to rise further next year.
Meta is gradually incorporating AI software that can, for example, create texts or images into its apps such as Facebook and Instagram. According to the group, this means that Meta AI has 500 million monthly active users. According to Zuckerberg, AI is already having a positive impact on the company’s business.
Dreams of digital worlds cost billions
Zuckerberg has already accepted losses of more than $50 billion for his vision of virtual worlds in which he expects people to work and spend their free time. In the last quarter alone, the Reality Labs division involved was operationally in the red of $4.4 billion. And with sales of just $270 million.
During the conference call after the quarterly figures were presented, an analyst asked whether the losses had perhaps reached their peak. Chief Financial Officer Susan Li said it will continue to invest heavily in Reality Labs because it is a long-term strategic priority.
Reality Labs is best known for VR glasses that allow you to immerse yourself in digital worlds. Meta is currently trying to open up a broader market for it with the new, cheaper Quest 3S model. Zuckerberg also relies heavily on ordinary-looking glasses with a camera and small speakers. They are intended to provide the AI software with helpful context for user queries. Meta is also developing glasses that can display digital objects in the real environment for the wearer.
Advertising business pays everything
However, Meta can still easily afford these expenses. Even after the huge loss at Reality Labs, group profits rose by 35 percent year-on-year to around $15.7 billion. Group sales grew by almost a fifth to $40.6 billion.
At least one app from the group, which includes Facebook and Instagram as well as WhatsApp, is accessed by 3.29 billion users every day. WhatsApp surpassed two billion calls per day.
Meta forecast sales of between $45 and $48 billion for the current quarter. An average forecast of a good $46 billion was expected on the market. The share fell by a good 3 percent in after-hours trading.
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**Interview with Tech Analyst Emma Reid on Meta’s Investment in AI and Virtual Reality**
*Editor*: Today, we’re speaking with Emma Reid, a seasoned tech analyst, to discuss Meta’s recent financial decisions and investments in artificial intelligence and virtual reality. Welcome, Emma!
*Emma Reid*: Thank you for having me!
*Editor*: Meta has announced an increased investment of at least $38 billion this year. What do you think these expenditures indicate about their strategy?
*Emma Reid*: This substantial investment overview signals that Mark Zuckerberg and Meta are doubling down on AI and virtual reality as critical components of their long-term strategy. Despite the uncertainty around these ventures’ immediate success, they aim to position themselves ahead of competitors in an increasingly AI-driven market.
*Editor*: You mentioned uncertainty. Given the mixed returns on these investments, particularly with Reality Labs running significant losses, can Meta sustain this spending?
*Emma Reid*: That’s a key question. While Reality Labs did report significant losses—over $50 billion to date—Meta’s overall profit remains robust, as seen in their recent quarter with a 35% year-on-year increase. Their core advertising business is very lucrative and currently supports these long-term bets. However, if these investments don’t begin to yield results, there could be pushback from shareholders.
*Editor*: Speaking of Reality Labs, how do you view the introduction of new products like the Quest 3S VR glasses?
*Emma Reid*: The Quest 3S represents Meta’s strategy to broaden its user base by offering more accessible, affordable options for virtual reality. By focusing on user-friendly designs, they’re attempting to attract a wider demographic and boost adoption rates, which is essential for making the metaverse vision a reality. However, market acceptance remains to be seen.
*Editor*: Zuckerberg claims that AI is already positively impacting Meta’s business. What does that mean for users of platforms like Facebook and Instagram?
*Emma Reid*: The integration of AI into these platforms usually means enhanced user experience through more personalized content, improved ads, and creative tools. For instance, features that generate text and images can significantly improve engagement. This pushes Meta toward a more interactive and seamless user experience, which could further entrench their already massive user base.
*Editor*: Meta’s sale forecasts indicate promising growth ahead. Are there any risks associated with this optimistic outlook?
*Emma Reid*: Absolutely. The tech landscape is rapidly evolving, and increased regulation or competition could threaten their plans. Additionally, if user engagement does not keep pace with these forecasts, it could lead to missed profits in the future, particularly if these heavy investments don’t translate into tangible returns.
*Editor*: Thank you, Emma. Your insights help to unravel the complexities of Meta’s current investments and future strategy.
*Emma Reid*: My pleasure! Looking forward to seeing how it unfolds.