How Does Meta Make Money?

Core Insights - Meta Platforms has transitioned from a social networking site to a leader in artificial intelligence and virtual/augmented reality, with a focus on building the metaverse and enhancing user engagement through AI [3][6][9]. Business Overview - Meta operates a suite of apps including Facebook, Instagram, and WhatsApp, which are used by billions for social interaction and community building [1][6]. - The company generates most of its revenue from targeted advertising across its platforms, utilizing user data to optimize ad placements [11]. Financial Performance - In Q3 2025, Meta reported a 26% year-over-year revenue increase to $51.24 billion, driven by higher ad impressions and user engagement [13]. - Daily active users across its apps grew by 8% year-over-year to 3.54 billion, with ad impressions increasing by 14% and average ad prices rising by 10% [14]. AI and Technology Investments - Meta is heavily investing in AI, with a focus on developing advanced conversational AI and integrating AI capabilities across its platforms [9][12]. - The company anticipates significant capital expenditures for AI infrastructure, projected to exceed $100 billion in 2026 [17]. Reality Labs Division - Reality Labs, responsible for VR and AR development, has been a major financial burden, posting an operating loss of $4.4 billion in the most recent quarter [16]. - Despite the losses in Reality Labs, the core advertising business remains profitable [16]. Recent Developments - Meta has established the Meta Superintelligence Labs to consolidate its AI efforts, focusing on large foundation models and AI-powered products [18][19]. - A joint venture with Blue Owl Capital aims to develop a $27 billion AI-optimized data center campus in Louisiana, part of a broader strategy to enhance AI infrastructure [20].