Meta Pours Billions Into AI While Reality Labs Bleeds Cash

If Mark Zuckerberg is right, the next must‑have wearable won’t count your steps or flash your texts. It will out‑think you on everything from homework to holiday planning.

In short: He believes a “personal superintelligence” clipped to your glasses just might be the next smartphone.

The Meta CEO unveiled the ambition on Wednesday’s Q2 earnings call, framing superintelligence as “AI that surpasses human intelligence in every way.”

“Over the last few months, we’ve begun to see glimpses of our AI systems improving themselves, and the improvement is slow for now, but undeniable,” Zuckerberg told the earnings call audience. “Developing superintelligence  — which we define as AI that surpasses human intelligence in every way — is now in sight. Meta’s vision is to bring personal superintelligence to everyone so that people can direct it toward what they value in their own lives.”

In a companion blog post released just before the numbers hit the tape, Zuckerberg argued that the next decade will decide whether AI “empowers people” or “replaces large swaths of society,” positioning Meta firmly on the empowerment side. He likened the coming transition to the shift from subsistence farming to modern abundance and predicted that glasses able to “see what we see, hear what we hear” will become our primary computers.

On the call, the CEO ticked off five areas where AI is already changing the company’s products and where superintelligence could accelerate progress:

Advertising efficiency: New recommendation models lifted ad conversions 5 % on Instagram and 3 % on Facebook in the quarter.

More engaging feeds: Better ranking systems added 5 % more time spent on Facebook and 6 % on Instagram.

Business messaging: Early “business AIs” on WhatsApp and Instagram are finding product‑market fit, especially for small merchants.

Meta AI assistant: Now topping 1 billion monthly users, the chatbot is slated to improve as Meta rolls out the next Llama model.

AI‑powered devices: Ray‑Ban Meta glasses are selling faster than the company can make them; a sportier Oakley model ships later this year.

Has superintelligence cooled Zuckerberg’s open‑source zeal? Not really. Meta’s Llama model is open-source, but nuance is creeping in. “We will continue to be a leader” in open‑sourcing frontier models, Zuckerberg said, while conceding that some systems are now “so big they’re not practical for others to use” and that true superintelligence raises “a whole different set of safety concerns.”

Reality of Reality Labs

While Zuckerberg talks up gigawatt‑scale compute clusters named Prometheus and Hyperion, his hardware unit keeps burning cash. Reality Labs, home to Quest headsets and those buzzworthy smart glasses, chalked up a $4.53 billion operating loss in the quarter — roughly $50 million wider than a year earlier — even as revenue rose a modest 5 % to $370 million.

For all the moonshot rhetoric, the core ad engine is humming. Second‑quarter revenue jumped 22 % to $47.52 billion, the fastest pace since 2021, helped by a 9 % rise in ad prices and an 11 % increase in impressions. Net income climbed 36 % to $18.34 billion, lifting the operating margin to 43 % from 38 %. Meta’s family of apps — Facebook, Instagram, WhatsApp and Messenger — now draws 3.48 billion people daily, up 6 % year over year.

In Wall Street shorthand, Meta is using today’s ad cash to pay for tomorrow’s thinking machines. If its bet on personal superintelligence pans out, the company won’t just know what you like, it may help you decide what to do about it.

“At each step so far, the most aggressive assumptions have been the ones that most accurately predicted what would happen,” he said. “We tell people: Take superintelligence seriously, because we think this is going to shape all of our systems sooner rather than later.”