Meta (META) is making a significant push into virtual reality (VR) and smart glasses, with its investments expected to exceed $100 billion by 2025. During a post-earnings call, CEO Mark Zuckerberg stated that 2025 will be a pivotal year to determine whether the company is on track to reach hundreds of millions and eventually billions of AI-powered glasses.
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Meta’s Bold Gamble on VR and Smart Glasses
Meta has made a significant investment in AI glasses and VR, but these products have yet to make a substantial impact on the company’s revenue. In the fourth quarter of 2024, Meta’s Reality Labs division posted an operating loss of $4.97 billion, with $1.1 billion in sales. Meanwhile, Reality Labs has accumulated an operating loss exceeding $60 billion since 2020. Notably, Meta’s Reality Labs includes research and development in augmented reality, virtual reality, and mixed reality (MR).
Despite this, Meta remains optimistic about their long-term potential, viewing them as key growth drivers in the future. The company also highlighted the success of its Ray-Ban smart glasses developed in partnership with EssilorLuxottica SA (FR:EL). According to sources familiar with the company’s performance, Meta sold 1 million pairs of Ray-Ban smart glasses in 2024. On the other hand, the company’s Quest VR headsets are still struggling to gain mainstream appeal, with estimates suggesting around 30 million units sold so far.
Additionally, Zuckerberg is focused on creating more sophisticated AR glasses that seamlessly integrate virtual content with the real world, showcasing the Orion prototype in September.
Moving ahead, Meta anticipates increasing its investment in Reality Labs by an additional $20 billion in 2025, bringing the total investment even higher. Overall, Meta projects its capital expenditures for 2025 to range between $60 billion and $65 billion, focusing on investments in generative AI and its core business.
Is META a Good Investment for 2025?
Overall, Wall Street has a Strong Buy consensus rating on META stock based on 42 Buys, three Holds, and one Sell recommendation. The average META stock price target of $753 implies a 9.3% upside potential.
