Meta Reports $26.8B Profit in Q1 While Reality Labs Incurs $4B Loss

(AsiaGameHub) –   Meta delivered a robust first quarter performance, yet investors zeroed in on two high-cost items in the earnings report: another loss from Reality Labs and a significantly expanded AI investment plan.

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Good to Know

• Reality Labs incurred an additional $4 billion loss during the quarter.
• Since 2021, the AR, VR, and metaverse division has accumulated $83.5 billion in losses over 21 quarterly filings.
• Meta currently projects 2026 expenditures to range from $125 billion to $145 billion, exceeding both its prior forecasts and analysts’ expectations.

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Meta’s Profit Remains Strong, But Spending Continues to Climb

Meta still possesses the financial resources to support major initiatives. During Q1, the firm posted net income of $26.8 billion—an increase of 61% compared to the same period last year. Revenue grew 33% year-over-year to reach $56.3 billion.

Despite this, the market response was negative. Meta’s stock dropped over 5% in after-hours trading following the company’s announcement of an elevated spending forecast, primarily driven by AI infrastructure costs.

Reality Labs continued to consume cash as well. The unit—responsible for AR glasses, VR headsets, and VR software—lost $4 billion in the quarter. This figure has become almost routine for Meta. Over the 21 quarterly reports issued since 2021, Reality Labs has racked up $83.5 billion in losses, averaging roughly $4 billion per quarter.

Simultaneously, Meta has scaled back its earlier metaverse initiatives and redirected greater focus to AI. The company aims to compete more directly with OpenAI and Anthropic, and this competitive race becomes more costly each quarter.

Meta CEO Mark Zuckerberg stated during the investor call:

“We are increasing our infrastructure capex forecast for this year,” Meta CEO Mark Zuckerberg told investors during a public call on Wednesday. “Most of that is due to higher component costs, particularly memory pricing […] We are very focused on increasing the efficiency of our investments.”

Meta also invested heavily last year in recruiting AI talent. The firm hired over 50 AI researchers and engineers from competing companies, then launched the revamped AI model Muse Spark in early April. Zuckerberg noted that Meta AI usage saw “large increases” after that release.

However, investors sought greater clarity on 2027 expenses. Meta CFO Susan Li declined to provide a specific figure.

“We aren’t providing a specific outlook for 2027 capex, and we are, frankly, undergoing a very dynamic planning process ourselves as we’re working through what our capacity needs will be over the coming years,” Meta CFO Susan Li responded. “Our experience so far has been that we have continued to underestimate our compute needs.”

That statement helps explain the market’s reaction quite clearly. Meta has the means to support substantial AI spending, but investors are now dealing with a company that has massive profits, consistent Reality Labs losses, and no defined limit on compute expenses.