Meta targets profitability for Muse and Reality Labs as AI, hardware losses persist

Traders Union
All News
Business & Wealth
Companies
Meta targets Muse & Reality Labs profit

Highlights

Meta's Muse AI assistant remains unprofitable due to high compute costs, with plans to improve efficiency and economics beginning next year.
Reality Labs is expected to reduce its annual losses to about $15 billion in 2027 from $18–19 billion forecasted for this year, according to Zuckerberg.
Meta still derives over 97% of its quarterly revenue from advertising, underscoring investor focus on monetization of newer AI and hardware segments.

Profitability timeline for Meta's AI and hardware businesses

As reported by Business Insider, Meta CEO Mark Zuckerberg says Muse remains unprofitable because the AI assistant is very compute intensive to run, even after its launch last month.

Speaking during Meta's third-quarter earnings call on Wednesday, Zuckerberg says the company expects to start improving Muse's economics next year by significantly raising compute efficiency. He adds that if those efficiency gains continue for several years, Muse could become highly profitable over time.

Zuckerberg says Meta plans to monetize Muse by taking a small transaction fee from purchases the assistant drives, a strategy he also outlined at the company's Connect conference last month. He adds that Muse launches only in the U.S. and Canada in part because of the computing resources it requires, with North America remaining Meta's most lucrative user market.

Loss reduction goals for Reality Labs

Zuckerberg also presents a more positive outlook for Reality Labs, Meta's loss-making division behind products including Meta Ray-Bans and virtual reality glasses.

He says the unit is expected to narrow its losses to about $15 billion in 2027, down from the $18 billion to $19 billion Meta expects it to lose this year. According to Zuckerberg, the business should begin trending toward profitability next year as Meta's AI systems make its devices and services more useful.

Meta continues to generate more than 97% of its quarterly revenue from advertising, leaving investors focused on whether newer AI and hardware initiatives can eventually deliver meaningful returns. Zuckerberg says he still believes the route to a holographic experience that blends the physical and digital worlds in everyday glasses will come through virtual reality first.

Our earlier report on the U.S. AI data center buildout highlighted mounting obstacles to expanding computing capacity, including rising financing costs, construction delays, and power-grid constraints. We noted that these pressures are testing investor confidence and raising doubts about how quickly AI infrastructure can scale to support growing demand.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.