Meta Reality Labs losses Starting 2025 with another shocking loss—$4.2 billion in the negative during Q1 alone— Meta’s Reality Labs section suggested that CEO Mark Zuckerberg’s once-grand metaverse plans would ultimately be on life support. Though Reality Labs is still bleeding, Meta’s main business.
The family of apps includes Facebook, Instagram, and WhatsApp—delivery was good. The company’s stock price jumped when its Q1 2025 results exceeded analyst projections. While net income skyrocketed 23% to $21.8 billion, revenue grew 16% year over year to $41.9 billion.
Meta’s Reality Labs Sees Huge Losses
Tasked with developing Meta’s VR and AR ecosystem—including Quest headsets and Ray-Ban smart glasses—reality labs reported considerably lower than expected revenues of just $412 million, far below the estimated $493 million. Though somewhat better than Wall Street’s projection of $4.6 billion, that $4.2 billion loss above the $3.8 billion Q1 loss from previous year. Reality Labs has suffered losses of over $60 billion since 2020. Zuckerberg defended these expenditures for years, saying during Meta’s Q4 2024 earnings call 2025 is a “pivotal year for the metaverse.” But this week his tone completely altered.
Meta Shifts from Metaverse to AI
“The major theme right now is how AI is transforming everything we do,” Zuckerberg said during Wednesday’s earnings call. He outlined five priority areas: improved advertising, engaging experiences, business messaging, Meta AI, and AI devices. Noticeably absent?
The word “metaverse.” While “AI devices” could technically encompass VR headsets and smart glasses, the shift in language underscores a quiet retreat from the immersive virtual spaces that once defined Meta’s strategic vision. Zuckerberg even projected that “most of the code” for Meta’s Llama LLM will soon be written by AI itself—a clear signal of where the company is heading.
Meta’s Metaverse Projects at Risk
Meta allegedly let over 100 people from Reality Labs go last week. A spokesman verified that teams inside Oculus Studios have been reorganized to improve effectiveness for next mixed reality projects. This is seen by industry observers as evidence of more fundamental transformation. Forrester VP and research director Mike Proulx thinks the writing is on the wall.
“I predict come end of this year, Meta will shutter its metaverse projects, like Horizon Worlds,” Proulx told The Register. Still, he does not see Reality Labs completely disappearing. Promising projects like Meta’s artificial intelligence glasses, which he sees as a possible growth engine, are being handled by the division. Reality Labs spans more ground than Meta’s metaverse program. Should those virtual reality initiatives fail to attract interest, they could be canceled. AI glasses and associated technology will probably still be a top concern, though, Proulx noted.
Meta’s AI Boosts Ad Performance
Unlike the metaverse, Meta’s AI creations are yielding observable effects right now. From increasing ad performance to optimizing user experience across its platforms, artificial intelligence is actually doing real work—and fast rising important to Meta’s future-proofing strategy under continuous antitrust investigation.
“With the metaverse, Meta was solving a problem that didn’t exist,” Proulx said. “Virtual reality still appeals to a niche market, and that’s likely to change not very soon.”
Meta’s AI Shift: Stock Up, Name Change Next?
Shareholders look happy as Meta turns strictly toward artificial intelligence. After the earnings release, the company’s stock climbed almost five percent. Still, the issue remains: will the business finally change the name “Meta” itself if the metaverse age is passing?
