Latest news with #RealityLabs
CNBC
3 days ago
- Business
- CNBC
Meta makes a big move into defense. Here's how it could start to matter for investors
Meta's expensive bet on virtual and augmented reality technology is making its way to the Pentagon. Investors who have been worried about when all that spending will pay off should feel a little bit better now. Meta announced Thursday that it is partnering with defense-technology company Anduril to create VR and AR devices such as headsets for the U.S. Army — and the news piqued our interest for a few reasons. For starters, the privately held Anduril was started by none other than Palmer Luckey, the founder of Oculus, which Meta acquired in 2014 for $2 billion to kickstart its ambitions in the world of VR technology. Luckey had an acrimonious split with the company then known as Facebook in 2017, but now they're back on working terms. But, as investors, the main reason to care is that working with Anduril could be a boon for Meta's Reality Labs division — home to its VR and AR teams, along with CEO Mark Zuckerberg's "metaverse" ambitions more broadly. Reality Labs has racked up cumulative operating losses north of $60 billion since late 2020, including a hefty $4.2 billion loss in the company's first quarter. In recent years, Wall Street has generally given Meta a pass on the Reality Labs losses — the stock is up more than 430% since the start of 2023. To be sure, that follows a brutal 2022 in which Meta shares lost nearly two-thirds of their value, driven in part by investor concerns about Zuckerberg's aggressive spending. But since then, the market has largely glossed over the Reality Labs losses thanks to Zuckerberg's intense focus on efficiency across the entire company, including steep job cuts, and the strong performance of its core Facebook and Instagram businesses. At the same time, investors also have gained an improved understanding on where Zuckerberg's controversial metaverse vision fits into the grand scheme of things. While Zuckerberg's north star may still be some form of the metaverse — a virtual world where people hang out, play, and shop — there is a recognition that the technology needed to get us there is artificial intelligence. AI, of course, has very real-world applications today, and Meta is investing heavily in it. AI is already delivering improvements to its bread-and-butter advertising business through improved ad targeting. Meta's Reality Labs has picked up some smaller successes along the way, most notably the AI-infused smart glasses made in collaboration with Ray-Ban. But, as the first-quarter results showed, the glasses haven't led to a materially improved financial picture for that division. And because we've seen Wall Street grow anxious before over the Reality Labs losses, we wouldn't be surprised to see it happen again without a better understanding of its future. That's where teaming up with Anduril comes into play. The partnership revolves around the U.S. government's Integrated Visual Augmentation System (IVAS) contract. This 10-year, $22 billion contract was initially awarded to Club name Microsoft in 2021. In late 2024, Microsoft partnered with Anduril to incorporate the latter's "Lattice" operating system onto Microsoft's mixed reality HoloLens platform. Then, earlier this year, Microsoft opted to hand control of the contract over to Anduril, giving it "oversight of production, future development of hardware and software, and delivery timelines," according to a press release. In exchange, Microsoft's Azure became Anduril's preferred cloud-computing destination for all IVAS-related workloads and Anduril's AI technologies. Anduril has named its next-generation IVAS product EagleEye. We're not arguing that the Anduril partnership will be a financial needle mover in the near term. However, if the effort proves successful — and betting against either Zuckerberg or Luckey has never proven a good bet — it provides a pathway to generate a stable source of Reality Labs sales from the U.S. government, and that means operating losses in the division should improve, assuming expenses remain under control. The move should also help further diversify the company's overall revenue stream, which is almost entirely reliant on social media ads, in the years to come. While Meta has proven to still be a fantastic outlet for advertisers, revenue diversification in the era of AI is a good thing to see. Consumer behaviors are already evolving — consider the way hundreds of millions of people are turning to AI chatbots, threatening online ad competitor Alphabet's core internet search business — and who knows what other changes could be in store. At a higher level, Meta's work with Anduril points to a continued shift in the private company/government partnerships. Some Silicon Valley tech giants have historically been hesitant to contract with the U.S. military out of fear of retaliation from consumers, employees, or both. However, we are now seeing top U.S. tech companies become more open to government partnerships. Indeed, late last year, Meta said it made its Llama AI model " available to U.S. government agencies and contractors working on national security applications." Zuckerberg also has taken steps to improve his relationship with President Donald Trump. In an interview on the Core Memory podcast released shortly after Thursday's news became public, Luckey shared some interesting thoughts on how Anduril can leverage all the money that Meta has so far invested to build products like the Ray-Ban glasses and Quest headsets: "What we're doing is working with Meta to take the building blocks that they've invested enormous amounts of money and expertise in, and we're able to use those building blocks in EagleEye without having to recreate them ourselves. There's things that Anduril probably could do if we were willing to put billions of dollars of taxpayer money into it. I think we could convince the Army to give us a lot of money to recreate these things, but why would you do that when they've already been made? Why spend five years doing something when it's already been done in the consumer sector? ... They do have a lot of intellectual property and building blocks that they've built that are just as useful on the battlefield as they are on the head of any consumer." That's not to say that Meta is going to start developing military-grade hardware, but this does offer up an opportunity to further monetize its massive investment in research and development (R & D) by licensing out whatever consumer-grade hardware and software may be useful to Anduril as it looks to build out the final product. On the same podcast, Luckey said Anduril and Meta have already been working closely together for the better part of a year, relying entirely on private funding for the initiative during that time. This is particularly notable because it suggests that Meta does not need to ramp up hiring overnight to handle the work with Anduril, potentially adding expenses to Reality Labs. It's already been ongoing. Bottom line Meta's partnership with Anduril represents an encouraging — albeit incremental — move in addressing the large Reality Labs losses, which could fuel additional earnings growth for the company. Just how significant a contribution this effort becomes, of course, depends on Anduril's ability to make EagleEye a success with widespread U.S. military adoption. On the podcast, Luckey said Anduril's intent is to deliver first prototypes to the Army this year, "if all goes according to plan the way that I hope." So, as with the Ray-Ban glasses, we may not see the fruits of this effort on Meta's next earnings report or even the next few after that. But there is now a more clear path for Reality Labs to start pleasing skeptical investors. (Jim Cramer's Charitable Trust is long META and MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
12-05-2025
- Business
- Yahoo
Meta (META) Stock Trades Up, Here Is Why
Shares of social network operator Meta Platforms (NASDAQ:META) jumped 6.6% in the afternoon session after the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions. This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains. However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels. Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism. The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand. Is now the time to buy Meta? Access our full analysis report here, it's free. Meta's shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. The biggest move we wrote about over the last year was 9 months ago when the stock gained 9.9% on the news that the company reported second quarter earnings results. Meta slightly beat analysts' revenue guidance expectations for the next quarter. In addition, this quarter's revenue and EPS narrowly outperformed Wall Street's estimates. Looking ahead, the company expects to continue investing in Reality Labs as its Ray-Ban Meta AI glasses are seeing strong traction. Overall, this quarter seemed fairly positive, and shareholders should feel optimistic. Meta is up 6.5% since the beginning of the year, but at $638.23 per share, it is still trading 13.4% below its 52-week high of $736.67 from February 2025. Investors who bought $1,000 worth of Meta's shares 5 years ago would now be looking at an investment worth $3,039. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Business Insider
07-05-2025
- Business
- Business Insider
The COO of Reality Labs is leaving Meta after nearly 11 years
Dan Reed, the chief operating officer of Meta's Reality Labs division, is stepping down after nearly 11 years at the company. Reed's departure marks another leadership change at a time when the division faces mounting internal and external pressure. Reed announced his exit Wednesday in a LinkedIn post, reflecting on his time building what he described as a "fast-growing, multibillion-dollar consumer technology business" spanning AI wearables, augmented and mixed reality, and the metaverse. "I see SO much exciting opportunity in this space, to which I eventually intend to return to lead and grow something cool and exciting," Reed wrote. "In the meantime, I'm very excited after this 20+ year run to take an extended break and spend quality time with my wife and two boys, reconnect with friends and family, and recharge." Reed, a former NBA executive, first joined Meta in 2014 to lead the company's partnerships with sports teams and athletes. Meta did not immediately respond to a request for comment. Reed's departure follows Meta's major restructuring of Reality Labs earlier this year. Business Insider first reported in January that the company began integrating Reality Labs more closely with its core business. This shift reversed parts of Meta CEO Mark Zuckerberg's 2021 reorganization, which had positioned the group as a stand-alone, metaverse-focused division. Under the new structure, sales, marketing, and analytics teams that once reported to Reed were redistributed under broader Meta leadership. Meta COO Javier Olivan now oversees the teams previously led by Reed, and other Reality Labs leaders have been aligned with top company executives, including chief marketing officer Alex Schultz and head of partnerships Justin Osofsky. Meta's chief technology officer, Andrew Bosworth, credited Reed at the time for guiding the business group through a phase of rapid growth. An internal memo viewed by BI in January said that Reality Labs' sales rose over 40% year-over-year in 2024, and the division beat nearly all of its aggressive sales and user goals. Bosworth called Reed's leadership "a major part" of that success. Despite those gains, Reality Labs remains a financial sinkhole for Meta. The division, which includes the Quest headsets, Horizon Worlds, and Meta's Ray-Ban smart glasses, has racked up more than $60 billion in losses since 2020. Last month, Meta laid off staff across Reality Labs, including teams working on VR gaming and the Supernatural fitness app. Internally, Bosworth has described 2025 as "the most critical" year for the division and said that Meta's ambitious metaverse bets could either validate years of investment or be remembered as a "legendary misadventure."
Yahoo
02-05-2025
- Business
- Yahoo
Meta's (META) Reality Labs Continue to Bleed Billions
Meta's (META) ambitious push into the metaverse is proving to be an expensive journey. In its latest quarter results, Meta's Reality Labs division posted another steep loss, highlighting ongoing challenges. Despite CEO Mark Zuckerberg's long-term vision and multibillion-dollar investments, both revenues and investor patience appear to be wearing thin. Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. Overall, Meta reported strong Q1 FY2025 results. Adjusted earnings per share came in at $6.43, significantly beating Wall Street's estimate of $5.24. META stock gained nearly 6% as of writing. For context, Meta's Reality Labs is the company's division focused on AR and VR, powering products like the Quest headset and its broader metaverse vision. According to Main Street Data, Meta's Reality Labs reported an operating loss of $4.21 billion in Q1 2025. This represents a 9% year-over-year increase in losses, though it's an improvement from the $4.97 billion loss in Q4 2024. Analysts had anticipated an operating loss of $4.6 billion. Meanwhile, revenue from the division fell 6.4% year-over-year to $412 million, down sharply from $1.08 billion in the previous quarter. This also missed analysts' expectations, which had forecast revenue of $492.7 million. The sharp decline in revenue, sequentially and compared to estimates, raises red flags about the unit's ability to generate consistent demand. The latest results show Meta's metaverse bets are still far from paying off. With falling revenue and big losses, it's getting harder to defend the heavy spending. If this trend keeps up, investors may push to scale back or reevaluate the division's strategy. Interestingly, Wall Street has long questioned Meta's heavy investment in the metaverse. In response, Zuckerberg admits it could take years to become a profitable business. Now, the company also faces new headwinds from sweeping tariffs introduced by President Donald Trump, which could raise production costs and lead to more expensive devices. Overall, META stock has a consensus Strong Buy rating among 38 analysts on TipRanks. That rating is based on 36 Buys, one Hold, and one Sell assigned in the last three months. The average META price target of $685.35 implies a 18.3% upside from current & DisclosureReport an Issue Sign in to access your portfolio
Yahoo
01-05-2025
- Business
- Yahoo
Why Is Meta (META) Stock Rocketing Higher Today
Shares of social network operator Meta Platforms (NASDAQ:META) jumped 7.2% in the pre-market session after the company reported strong first quarter 2025 results which exceeded analysts' expectations across revenue, EPS, and EBITDA. Revenue grew 16% year over year, driven by a 10% rise in average ad prices and a 5% increase in impressions across Meta's Family of Apps. The real story for the quarter was the 27% rise in operating income and a 37% jump in EPS, driven by a sharp rebound in ad pricing and disciplined expense management, despite elevated investments in AI infrastructure and product development. Looking forward, Meta raised its capital expenditure outlook to reflect greater investment in data centers and AI, suggesting that growth investments remain a top priority. Overall, this quarter had some key positives: accelerating ad revenue, growing earnings, and a business model that continues to show operating leverage in a volatile digital environment. The shares closed the day at $572.09, up 4.5% from previous close. Is now the time to buy Meta? Access our full analysis report here, it's free. Meta's shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. The biggest move we wrote about over the last year was 9 months ago when the stock gained 9.9% on the news that the company reported strong second quarter 2024 earnings. Meta slightly beat analysts' revenue guidance expectations for the next quarter. In addition, this quarter's revenue and EPS narrowly outperformed Wall Street's estimates. Looking ahead, the company expects to continue investing in Reality Labs as its Ray-Ban Meta AI glasses are seeing strong traction. Overall, this quarter seemed fairly positive, and shareholders should feel optimistic. Meta is down 4.6% since the beginning of the year, and at $571.50 per share, it is trading 22.4% below its 52-week high of $736.67 from February 2025. Investors who bought $1,000 worth of Meta's shares 5 years ago would now be looking at an investment worth $2,825. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Sign in to access your portfolio
