Meta Shifts Focus to AI as VR Losses Mount; Microsoft Sees Gains from OpenAI Investment
Meta is pivoting towards artificial intelligence, with CEO Mark Zuckerberg envisioning AI as the future of social media, even as the company's virtual reality division, Reality Labs, continues to bleed money. This strategic shift comes as Microsoft is reaping substantial financial benefits from its investment in OpenAI.
Meta's earnings report, released Wednesday, revealed that Reality Labs lost $19.1 billion in 2025, slightly more than the $17.7 billion lost in 2024, according to TechCrunch. In the fourth quarter alone, the unit posted a loss of $6.2 billion against sales of $955 million, and $2.2 billion throughout 2025. Despite these losses, Zuckerberg expressed optimism about the company's VR efforts during the earnings call.
However, Zuckerberg also emphasized the growing importance of AI for Meta. "In 2025, we rebuilt the foundations of our AI program," he said, referring to the company's recently restructured AI lab. He added that users will begin to see new AI models and products from Meta in the coming months, with a particular focus on AI-driven commerce. Zuckerberg teased "new agentic shopping tools" that will help users find products from businesses in Meta's catalog.
Meanwhile, Microsoft reported a $7.6 billion increase in net income from its investment in OpenAI, highlighting the potential financial rewards of betting on AI. TechCrunch reported that OpenAI has a 20% revenue share agreement with Microsoft, although neither company has publicly confirmed this. Microsoft has invested over $13 billion in the AI lab, which is reportedly seeking additional funding at a valuation between $75 billion and $83 billion.
The shift in focus at Meta comes as Tesla CEO Elon Musk announced the end of production for the Model S sedan and Model X SUV during the company's quarterly earnings call on Wednesday. Musk stated that the final versions of both electric vehicles will be made next quarter, with Tesla offering support for existing owners. According to Musk, Tesla will use the factory space to build Optimus robots.
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