Analyst Says Meta (META) Glasses Will Be a ‘Low Volume’ Product

Meta Platforms (META) reported stronger-than-expected Q1 fiscal results, driven by robust revenue growth and operating margin expansion, and provided Q2 revenue guidance above consensus while trimming full-year expense guidance despite increased AI infrastructure CapEx. The company continues to leverage its 3.4 billion daily active users with AI-powered ad-delivery tools and is developing new revenue streams, such as WhatsApp ads, supported by a strong balance sheet and a new quarterly dividend. While its smart glasses are seen as industry-paving innovations, an analyst cautions they are unlikely to generate significant near-term revenue or profits.

Analysis

We recently published 10 Stocks Wall Street is Watching Heading into October. Meta Platforms, Inc. (NASDAQ:META) is one of the stocks Wall Street is watching. Anshel Sag, Principal Analyst at Moor Insights & Strategy, recently argued during a program on CNBC that Meta’s smart glasses will help improve people’s lives by helping them look at their phones “less.” However, the analyst said these producers are not likely to generate significant revenues or profits for the company. “This is a product that kind of paves the way for the industry, which is what Meta has done in the XR space overall. You kind of saw them do this with their VR headsets as well. But I would say that this is a fairly low volume product and is very much a thought-processing and thought-provoking product more than it will be something that will generate significant revenues or profits.” Frederic Legrand - COMEO / Shutterstock.com Alger Spectra Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its second quarter 2025 investor letter: “Meta Platforms, Inc. (NASDAQ:META) is the world’s largest social-media company, spanning Facebook, Instagram, WhatsApp and Messenger, and its Reality Labs arm pursues next-generation augmented- and virtual-reality hardware. Its Family of Apps averaged 3.4 billion daily active users in March 2025, highlighting the unrivalled scale that underpins its advertising franchise. The company’s AI powered ad-delivery tools are driving higher pricing and better campaign performance, while new initiatives—such as the rollout of ads in WhatsApp—have the potential to unlock fresh revenue streams and are supported by a cash-rich balance-sheet that now includes a quarterly dividend. Shares rose during the quarter after fiscal first-quarter results came in better-than-expected due to strong revenue growth and operating margin expansion. Additionally, management guided fiscal second-quarter revenue above consensus and trimmed full-year expense guidance even as it lifted capital-expenditure plans to accelerate AI-infrastructure build-out.” While we acknowledge the potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Meta Platforms, Inc. (META) is demonstrating significant fundamental strength, underscored by better-than-expected fiscal first-quarter results that featured strong revenue growth and operating margin expansion. This performance prompted management to issue fiscal second-quarter revenue guidance above consensus and to trim full-year expense guidance. This improved outlook is notable as it coincides with an increase in capital expenditure plans aimed at accelerating the company's AI-infrastructure build-out. The core advertising business is supported by an immense user base, with its Family of Apps averaging 3.4 billion daily active users as of March 2025. Growth is being actively driven by AI-powered ad-delivery tools that enhance pricing and campaign performance, with new initiatives like WhatsApp ads poised to unlock further revenue streams. The company's financial position is robust, reflected by a cash-rich balance sheet and the recent initiation of a quarterly dividend. In contrast to the profitable core business, its next-generation hardware, such as the new smart glasses, is viewed by analysts as an industry-paving but low-volume product not expected to generate significant near-term revenues or profits, positioning it as a long-term strategic play rather than a current growth driver.

Key Decisions for Investors

• Investors should evaluate the positive momentum in the core advertising business, driven by AI-enhanced ad tools and strong Q1 results, which underpins the company's above-consensus Q2 revenue guidance.
• Consider the company's capital allocation strategy, which balances aggressive capital expenditure for AI infrastructure build-out with the new initiation of a quarterly dividend, reflecting both growth ambitions and financial maturity.
• It is prudent to differentiate between the company's established, high-margin advertising segments and its long-term, speculative Reality Labs hardware, as products like smart glasses are not expected to be significant near-term profit drivers.
• Monitor the development of new revenue streams, such as ads in WhatsApp, which represent potential upside for the already vast advertising franchise supported by 3.4 billion daily active users.