It has been a busy week for both Wall Street and Silicon Valley as many tech companies unveil their Q4 2024 earnings reports.
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Meta Platforms (META)  is in full focus as earnings season kicks off, for good reason. The Facebook parent has made several key changes recently, including opting to end its fact-checking and replace it with a system similar to the Community Notes system implemented by Elon Musk on X.
After several months of watching META stock trend upward, many investors watched closely as the company revealed its Q4 and full-year results for 2024 yesterday. Meta reported growth across several key areas, including earnings-per-share (EPS) and net income.
CEO Mark Zuckerberg laid out the company’s plans for the coming year, which include furthering its investments in developing more advanced artificial intelligence (AI).
But, he also predicted that recent data suggests this may lead to complications in the coming year.
Mark Zuckerberg, chief executive officer of Meta Platforms recently made a prediction on the company’s Q4 2024 earnings call that raises some questions. Photographer: Jason Henry/Bloomberg via Getty Images
Zuckerberg and Meta are focused on more than just AI in 2025
With investors and consumers highly focused on AI models, especially as Chinese startup DeepSeek continues to trend, it can be easy to forget that tech companies are also exploring other areas of technology.
Granted, Zuckerberg informed investors on the Q4 earnings call that Meta plans to invest between $60 and $65 billion in developing its AI infrastructure this year. He also clarified that the company is still focused on building out its metaverse technology, noting that he believes 2025 is “going to be a pivotal year for the metaverse.”
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Zuckerberg highlighted the Meta Quest line of virtual reality (VR) headsets and Meta Horizon Worlds, a metaverse gaming platform, as areas that have seen user growth recently.
“This is a year when a number of the long-term investments that we’ve been working on that will make the metaverse more visually stunning and inspiring will really start to land,” he predicts.
That may be true, but Reality Labs, the Meta division responsible for developing both products and the company’s other Metaverse applications, isn’t doing so well.
In fact, Reality Labs has been steadily bleeding money since its founding in 2020, with losses of $60 billion over the past five years. A recent report from Yahoo Finance provided an in-depth look at the Meta division’s finances, stating:
“The unit, responsible for its virtual reality headset line “Quest” and its Ray-Ban smart glasses, reported a loss of $5 billion in its Q4 earnings (totaling $17.7 billion in 2024). Its revenue slightly rose 1% year over year to $1.08 billion, driven by hardware sales. Expenses jumped to $6 billion, up 5% year over year.”
As these numbers show, Reality Labs’ outlook isn’t entirely negative. However, they also raise the question of whether hardware sales can continue to drive enough growth to balance the rising expenses, which are likely to continue increasing.
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Analyst Anshel Sag of Moor Insights & Strategy highlighted some concerns about the high cost of augmented reality (AR) technology, a key element of the Ray-Ban smart glasses, noting, “AR is a very expensive technology to develop, and I believe most of the money that matters spending in Reality Labs is on AR efforts.”
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For all the complications Reality Labs seems to be facing, Zuckerberg’s focus on the metaverse makes sense—and not just for profitability purposes. A few months ago, the Meta CEO appeared on the Joe Rogan Experience podcast and called out Apple AAPL for what he described as a “lack of innovation.”
Related: Analysts revisit Meta stock price targets after earnings surprise
That said, some might argue that Zuckerberg’s company spent years growing exponentially without producing innovative products. Instagram and WhatsApp, two of Meta’s pillars, were built by other people and acquired by Zuckerberg, and Facebook itself is based on an idea he is accused of stealing.
However, the company’s foray into metaverse technology provides Zuckerberg with an opportunity to actually innovate.Â
Just how much Meta will be able to grow and scale its metaverse operations remains questionable, however, as Reality Labs is facing both rising losses and costs, making for a complicated economic outlook.
One former manager from Reality Labs echoed Sag’s sentiment that high costs pose problems for the company, telling Yahoo of Meta’s team, “They haven’t figured out how to make this profitable, and they’re not even close.”
That opinion significantly deviates from Zuckerberg’s positive take on his company’s Metaverse plans, and only future earnings reports will demonstrate whether Meta can successfully reduce these key costs.Â
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