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Zuckerberg Bets Big on AI as Meta's VR Dreams Falter

Meta Shifts Focus to AI Amidst VR Losses, While Microsoft Profits from OpenAI

Meta is pivoting towards artificial intelligence, with CEO Mark Zuckerberg outlining plans for new AI models and products in the coming months, even as the company's virtual reality division, Reality Labs, reported substantial losses. Meanwhile, Microsoft is reaping significant financial benefits from its investment in OpenAI.

Zuckerberg stated on Wednesday's investor call that Meta had "rebuilt the foundations of our AI program" in 2025 and would begin rolling out new AI models and products soon. He highlighted AI-driven commerce as a key area of focus, envisioning "agentic shopping tools" that would help users find products within Meta's catalog. "This also has implications for commerce," Zuckerberg said. This shift comes as Zuckerberg appears to be moving away from the metaverse, with AI-generated content potentially becoming the next major media format, according to The Verge.

The renewed focus on AI arrives as Meta's Reality Labs continues to struggle financially. The division, responsible for the company's VR efforts, lost $19.1 billion in 2025, slightly more than the $17.7 billion lost in 2024, according to Meta's earnings report. In the fourth quarter of 2025 alone, Reality Labs posted a loss of $6.2 billion against sales of $955 million. For the entire year, the unit generated $2.2 billion in sales, TechCrunch reported. Earlier this month, Meta laid off 10 members of the Reality Labs staff, reportedly cutting as many as 1,000 employees.

In contrast to Meta's VR losses, Microsoft is seeing substantial gains from its investment in OpenAI. The software giant reported a $7.6 billion increase in net income from its stake in the AI lab, TechCrunch reported on Wednesday. Microsoft has invested over $13 billion in OpenAI and reportedly has a 20% revenue share agreement with the company. OpenAI is currently seeking additional funding at a valuation between $75 billion and $83 billion, according to Bloomberg. Microsoft and OpenAI renegotiated some of the terms of their deal in September, when OpenAI restructured.

In other tech news, Tesla CEO Elon Musk announced during the company's quarterly earnings call that production of the Model S sedan and Model X SUV would end next quarter. The company will continue to support existing owners of these vehicles. Musk stated that Tesla is "really moving into a future that is based on autonomy," and that the Fremont, California factory space previously used for Model S and Model X production will be used to build Optimus robots.

AI-Assisted Journalism

This article was generated with AI assistance, synthesizing reporting from multiple credible news sources. Our editorial team reviews AI-generated content for accuracy.

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