Mark Zuckerberg may see the world through AI-powered Ray-Bans, but Wall Street just sees it through his company’s ad dollars. And while he’s trying to look beyond the feed to a future with talking glasses and immersive virtual worlds, investors are hoping he’ll stick with what his company does best.
The Meta (META) CEO continues to deliver solid results for the company; it just reported first-quarter 2025 earnings, with a 16% year-over-year increase in revenue, a 37% rise in earnings per share, and a staggering 89% profit increase on 27% revenue growth. But Zuckerberg crucially seems to misunderstand what people want — which isn’t walking around with a virtual reality headset glued to their heads.
Meta is, first and foremost, still an advertising company.
Its ad business, particularly on its platforms such as Facebook, Instagram, and WhatsApp, drove the company’s first-quarter growth. Ad impressions were up 5%, and the average ad price increased 10% year-over-year. Chief financial officer Susan Li noted on the first-quarter earnings call that the online commerce vertical led the way for the company as the largest contributor to year-over-year growth. AI tools are enhancing Meta’s targeting capabilities, but ultimately, they serve the same purpose: helping advertisers find — and monetize — eyeballs.
There was only a single quote from Zuckerberg in the press release accompanying the earnings report — and it referenced AI glasses, not ad performance. He said that this was an important year, Meta’s community is growing, the business is performing very well — and, “We’re making good progress on AI glasses and Meta AI.”
Zuckerberg clearly still envisions a future where Meta looks like it’s something straight out of a science fiction novel, but that just isn’t the case. And the earnings back that up.
The company’s Reality Labs division, home to Meta’s augmented and virtual reality initiatives, is a massive drain. It reported a first-quarter operating loss of $2.96 billion on $695 million in revenue. The division’s operating loss was $4.2 billion. Since 2020, Reality Labs has burned $60 billion — with nothing really to show for it.
Horizon Worlds, Meta’s social VR playground-like platform where users can build and interact in shared virtual environments, hasn’t seen much momentum, and neither has Horizon Workrooms, which brings remote collaboration into VR. And while Meta has a good hold on the headset market with its Quest VR headset line, the headsets haven’t broken through to a mainstream audience.
Zuckerberg said on the first-quarter earnings call that the company is, however, “seeing deeper engagement as Quest 3S makes VR accessible to more people, and more people are creating experiences in Horizon with AI tools.”
So regardless of the numbers and all the accompanying data, signs suggest that Zuckerberg still sees a future built around the metaverse — and its smart glasses. He claimed on the earnings call that Meta’s glasses partnership with Ray-Ban (EL) has “tripled in sales” year-over-year, and there’s a plan to ramp production to 10 million units annually. The glasses are now integrated with Meta’s standalone app and its Llama 4-powered AI assistant.
“I think that we’re all going to have an AI that we talk to throughout the day,” Zuckerberg said. “Eventually, that’ll be on glasses.”
He continued, “Glasses are the ideal form factor for both AI and the metaverse. … More than a billion people worldwide wear glasses today, and it seems highly likely that these will become AI glasses over the next five to 10 years.”
But the reality doesn’t quite match the hype. In 2022, Zuckerberg predicted that augmented reality glasses would become commonplace in three to five years. Now, almost three years later, Meta has sold just over two million units of its smart glasses partnership with Ray-Ban — hardly commonplace.
So it’s far from clear that glasses — or Zuckerberg’s broader metaverse vision — will become a real business anytime soon.
Others in the company seem to see that the end of Reality Labs is nigh. Last week, Meta conducted layoffs in the division, primarily affecting teams that focused on VR gaming and the Supernatural VR fitness app. Earlier this year, Business Insider reported on a leaked memo from Meta’s chief technology officer that said 2025 would either prove that the metaverse “will go down as the work of visionaries or a legendary misadventure.”
But it’s unclear whether Zuckerberg will let the division fall to pieces. This is the guy who, almost three years ago, declared that Meta was now “a metaverse company” that would focus on building the future of social connection through virtual and augmented reality.
Investors and other top Meta executives might encourage more of a pivot away from Zuckerberg’s lofty visions even further toward a more concrete revenue stream: AI. The CEO said on the earnings call that “the major theme right now, of course, is how AI is transforming everything we do.” Projected capital expenditures have risen to as much as $72 billion for 2025, largely to fund AI infrastructure.
And a lot of what Meta has done with AI goes back to, yes, advertising.
The company has leveraged AI to enhance ad targeting, creative generation, and campaign optimization. AI has made Meta’s ad machine even more efficient. AI-generated creative tools saw 30% more usage this quarter, and a recommendation model being tested for Reels has boosted conversion rates by 5%. Meta is evolving, but it’s evolving using the same core business model: better and smarter ads.
CFO Li said Meta is seeing strong adoption of its AI-driven ad products such as Advantage+ and Advantage+ creative. This week, she said, Meta will expand video tools for advertisers on Facebook Reels, allowing automatic resizing of videos using AI-generated pixels for full-screen formats. The company has also launched image generation for all eligible advertisers and plans to test a generative AI–powered virtual try-on feature that displays clothing on virtual models.
“AI has already made us better at targeting and finding the audiences that will be interested in [businesses’] products,” Zuckerberg said on the call. “I think that this is really redefining what advertising is — into an AI agent that delivers measurable business results at scale.”
He added, “If we deliver on this vision, then over the coming years, I think that the increased productivity from AI will make advertising a meaningfully larger share of global GDP than it is today.”
For now, the chunk of Meta’s business that is efficient, structured, and immensely profitable is still advertising. Meta AI is becoming increasingly important and shows plenty of promise. Maybe smart glasses and the metaverse will one day matter. But what matters right now are the billions of ads being served across the company’s family of apps that are increasingly shaped by AI — but are still firmly rooted in a business model that’s nearly two decades old.
Zuckerberg wants Meta to reinvent how we interact with technology. But until the glasses — and everything they represent — catch on, he’s still selling us the same thing: our attention, optimally priced and algorithmically delivered.
As long as Meta keeps finding ways to help advertisers reach its vast user base, investors might be happy to let Zuckerberg keep dreaming about the future.
They just want him to keep the ad dollars flowing in the meantime.
