Meta’s AR and VR Ambitions Are Still Losing Billions Despite the AI Boom

Meta’s artificial intelligence business may be accelerating, but the company is still pouring enormous amounts of money into augmented reality and virtual reality projects that continue to generate massive losses.

The company’s Reality Labs division, which oversees Meta’s AR and VR hardware and metaverse initiatives, remains one of the most expensive bets in the technology industry. According to recent reporting, Meta expects overall company spending in 2026 to reach between $125 billion and $145 billion, significantly above earlier projections. A major portion of that investment continues to flow into AI infrastructure and Reality Labs. 

Reality Labs has become synonymous with Meta CEO Mark Zuckerberg’s long-term vision of owning the next computing platform beyond smartphones. But years after the company rebranded from Facebook to Meta, the business is still struggling to turn VR and AR investments into a profitable operation.

Reality Labs Continues to Burn Cash

Meta’s AR and VR division has been losing billions of dollars every quarter for several years.

Earlier in 2026, reports showed Reality Labs lost roughly $19 billion during the previous year alone, continuing a long streak of heavy financial losses tied to headset development, metaverse software, AI wearables, and experimental computing platforms. 

The division includes products and platforms such as:

• Meta Quest headsets
• Ray-Ban Meta smart glasses
• Horizon Worlds
• AR research projects
• Neural interface experiments
• AI-powered wearable hardware

Despite the losses, Meta has shown little sign of slowing down.

The company continues expanding infrastructure, custom silicon development, and AI-powered wearable technologies because Zuckerberg still believes future computing will eventually shift away from smartphones toward immersive hardware ecosystems. 

AI Has Partially Replaced the “Metaverse” Narrative

One of the biggest shifts inside Meta over the last two years has been the company’s move away from heavily promoting the term “metaverse.”

Instead, Meta is increasingly framing its hardware ambitions around artificial intelligence.

That transition is visible across the company’s newer products. The Ray-Ban Meta smart glasses, for example, are now positioned more as AI assistants with cameras and voice interaction rather than purely augmented reality devices. 

Meta has also been aggressively expanding its AI infrastructure footprint through new internal initiatives focused on data centers, AI chips, and energy capacity. Zuckerberg recently said the company plans to build “tens of gigawatts” of AI infrastructure capacity over time. 

Even Horizon Worlds, once promoted as a centerpiece of the metaverse strategy, has undergone major changes. Reports earlier this year indicated Meta was shifting more attention toward mobile experiences while reducing emphasis on VR-only usage. 

The broader technology market has also cooled on the metaverse concept. Industry analysts and commentators increasingly view AI as the dominant technology trend replacing the earlier metaverse hype cycle. 

Smart Glasses Are Emerging as Meta’s Most Promising Hardware Category

While VR headsets remain expensive and relatively niche, Meta’s AI smart glasses business has shown stronger consumer traction.

More than seven million Meta smart glasses have reportedly been sold, according to legal filings connected to recent privacy lawsuits involving the product line. 

The glasses are important strategically because they give Meta a chance to build hardware that consumers may wear daily, something the company never fully achieved with VR headsets.

The company appears increasingly focused on combining:

• AI assistants
• Voice interaction
• Cameras
• Contextual computing
• Lightweight wearable hardware
• into a more mainstream consumer product category.

That direction could eventually become more commercially viable than the broader metaverse vision that originally drove Meta’s rebranding effort.

Investors Are Still Divided on the Long-Term Payoff

Wall Street remains split on whether Meta’s AR and VR investments will eventually pay off.

Supporters argue that Meta is making the same kind of long-term infrastructure bet Amazon once made with AWS. If wearable computing eventually becomes mainstream, Meta could control both the platform and the advertising ecosystem built on top of it.

Critics, however, point to the scale of spending versus the relatively limited commercial success of VR so far.

Reality Labs has become one of the clearest examples of how expensive the race for next-generation computing platforms has become. Between AI infrastructure expansion and AR/VR research, Meta is now spending at levels that rival some governments’ national technology budgets. 

Still, Zuckerberg appears committed to continuing the strategy even as the company reshapes its messaging around AI rather than the metaverse itself.

For Meta, the underlying goal has not changed: own the next major computing platform before someone else does.