Technology

Meta heavily invests in AI and virtual worlds despite significant losses

Meta is investing heavily in artificial intelligence and virtual worlds and exceeded revenue and profit forecasts in the third quarter of 2024, but is struggling with significant losses in the Reality Labs division.

Eulerpool News Nov 1, 2024, 10:43 AM

The US company Meta continues to heavily invest in artificial intelligence and virtual worlds to secure a technological edge over the competition. Founder and CEO Mark Zuckerberg is increasing investments in this area despite unclear prospects for success and significant financial burdens.

In the current year, Meta plans to invest at least $38 billion in long-term projects, including the expansion of data centers for AI. This amount is one billion dollars higher than initially expected and is expected to increase further next year. At the same time, the company is increasingly integrating AI software into its main platforms, Facebook and Instagram, resulting in Meta AI reaching 500 million monthly active users. Zuckerberg emphasizes that AI has already had positive effects on the business.

Despite these positive developments, Reality Labs, the division for virtual worlds, remains a significant financial burden. In the past quarter, Reality Labs reported operating losses of 4.4 billion US dollars with revenue of only 270 million US dollars. These losses raise questions about whether the high investments in virtual worlds are profitable in the long term. However, CFO Susan Li stated that Reality Labs continues to be a strategic priority and that the investments are necessary to secure future growth.

On the other hand, Meta's overall corporate profit increased by 35 percent year-over-year to approximately $15.7 billion, while revenue rose by nearly a fifth to $40.6 billion. The cloud segment AWS (Amazon Web Services) grew particularly strongly, achieving an operating profit of $10.4 billion, an increase of almost 50 percent compared to the previous year. Revenue in this area grew by nearly 20 percent to $27.5 billion, continuing to make AWS the company's profitability gem.

Despite the positive quarterly figures, investors reacted skeptically to the developments. In NASDAQ trading, Meta's stock fell by 4.09 percent to 567.58 USD after the market closed. This price correction reflects the uncertainty of investors in view of the high losses in Reality Labs and the long-term risks in the field of virtual worlds.

Mark Zuckerberg personally benefits from the stock price increase. His wealth rose to $209 billion due to the performance of the stock, making him the third richest person in the world after Elon Musk and Jeff Bezos. Despite these personal successes, the future of Meta's investments in AI and virtual worlds remains uncertain, as the high losses and long-term prospects continue to raise questions.

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