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Meta shatters Revenue Records, Doubles Down on AI adn Smart Glasses despite VR Restructuring
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Meta Platforms reported record-breaking financial results, exceeding expectations with $59.89 billion in revenue for the fourth quarter of 2025 and a full-year total of $200.97 billion – representing a 22% and 24% year-over-year growth, respectively. The social media giant’s success is fueled by continued growth in its core “Family of Apps” and a surprisingly strong performance from its Reality Labs division, despite recent strategic shifts.
Core Apps Drive Growth, Advertising Remains Strong
Meta’s flagship applications – Facebook, Instagram, and WhatsApp – continue to dominate the social media landscape, attracting an average of 3.58 billion daily active users in December, a 7% increase compared to the same period last year. This robust user base translated into increased advertising revenue, with a 6% rise in the fourth quarter and a 9% increase throughout 2025.
Reality Labs Finds Footing with New Hardware
While often scrutinized for its substantial investments in the metaverse, Reality Labs delivered one of its strongest quarters to date, driven by robust sales of the Meta Quest 3S and the Ray-Ban Meta (Gen 2) AI glasses. The division generated nearly $1 billion in revenue in Q4 2025 and $2.27 billion for the entire year, despite a slight dip in quarterly revenue. According to a company release, the success of these new hardware offerings is a key factor in the division’s overall performance.
AI Takes Center Stage for 2026
Much of CEO Mark Zuckerberg’s commentary during the earnings call centered on the company’s aspiring artificial intelligence (AI) initiatives and the role of Reality Labs in their growth. Zuckerberg highlighted plans for “new agentic shopping tools” in 2026, designed to provide users with highly personalized product recommendations.
Smart Glasses Poised for Explosive Growth
Zuckerberg expressed considerable optimism regarding the future of the company’s AI glasses, stating, “We think our glasses are some of the fastest-growing consumer electronics in history.” Meta anticipates doubling or even tripling production of smart glasses in 2026 to capitalize on this momentum and maintain its leadership position, even as competitors like Google and Samsung prepare to enter the market. As a result, Reality Labs is prioritizing investments in smart glasses and wearables, while together working to make its Horizon platform a success on mobile and establishing a profitable virtual reality (VR) ecosystem.
Strategic Restructuring and Workforce Reduction
In a move signaling a shift in priorities, Meta recently reduced its Reality Labs workforce by 10%, including the majority of its in-house game development studios. Though, a senior official clarified that this does not represent an abandonment of VR, but rather a recalibration of strategy.
Continued Investment Despite Cuts
Perhaps surprisingly, Meta announced that Reality Labs’ financial “losses” are expected to remain at 2025 levels in 2026, hovering around $20 billion. The company is committed to substantial investment in AI infrastructure, projecting expenditures between $162 and $169 billion in 2026 for both infrastructure and development.One analyst noted that the continued high level of spending, even after the workforce reductions, raises questions about the efficiency and transparency of Reality Labs’ operations.
VR Investment Questioned, Future Remains Murky
The cuts to Meta’s VR studios in mid-January reportedly damaged relationships with game developers and consumers. Given that these changes haven’t substantially impacted reality Labs’ overall spending,it prompts a reevaluation of the company’s strategic decisions. The precise allocation of these funds remains unclear, with the company maintaining a degree of secrecy regarding its internal spending.
Key Financial Highlights – Meta reported $59.89 billion in revenue for Q4 2025 and $200.97 billion for the full year, representing 22% and 24% year-over-year growth, respectively.
User Growth – Meta’s Family of Apps reached 3.58 billion daily active users in December, a 7% increase year-over-year.
Advertising Revenue – Advertising revenue increased by 6% in Q4 2025 and 9% throughout the year.
Reality Labs Revenue – Reality Labs generated $1 billion in revenue in Q4 2025 and $2.27
