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An attendee wears a Meta Platforms Inc. Oculus Quest 2 virtual reality (VR) headset at the Telefonica SA stand on day two of the Mobile World Congress at the Fira de Barcelona venue in Barcelona, Spain, on Tuesday, Feb. 28, 2023.

Angel Garcia | Bloomberg | Getty Images

Meta is spending billions of dollars a quarter to fulfill CEO Mark Zuckerberg’s dream of a futuristic virtual world that he calls the metaverse.

Despite the company’s commitment to making its founder’s dream come true, the virtual reality market is contracting.

Sales of VR headsets and augmented reality glasses in the U.S. plummeted nearly 40% to $664 million in 2023, as of Nov. 25, according to data shared with CNBC by research firm Circana. That’s a much steeper drop than last year, when sales of AR and VR devices slid 2% to $1.1 billion.

The two-year decline underscores Meta’s continuing challenge in bringing the immersive technology out of a niche gaming corner and into the mainstream. While Zuckerberg said, in announcing Facebook’s pivot to Meta in late 2021, that it would likely take a decade to reach a billion users, he may need to start showing more optimistic data to appease a shareholder base that’s been critical of the company’s hefty and risky investments.

Thus far, there hasn’t been a breakout success — or killer app — to validate Zuckerberg’s vision. Meta’s Reality Labs unit, which is developing VR and AR technologies, lost $3.7 billion in the third quarter on sales of $210 million. In total, the division has lost about $25 billion since the beginning of 2022, shortly after Zuckerberg renamed his company.  

Meta declined to provide a comment for this story but pointed to a blog post on Monday from Chief Technology Officer Andrew Bosworth, who runs Reality Labs. Bosworth called artificial intelligence and the metaverse Meta’s “two long-term bets on technologies of the future,” and said they’re beginning to “intersect in the form of products accessible to huge numbers of people.”

“Making long-term bets on emerging technologies isn’t easy,” Bosworth wrote. “It’s not guaranteed to work, and it’s certainly not cheap. It’s also one of the most valuable things a technology company can do — and the only way to remain relevant over the long run.”

Meta is currently the leader in the VR market, with sales of its Quest-branded headsets representing the bulk of the U.S. market by a large margin, said Ben Arnold, Circana’s consumer technology analyst. Sony released its second-generation PlayStation VR2 headset earlier this year but hasn’t picked up much market share due in part to the device’s reliance on the PlayStation 5 video game console, Arnold said.

Sony didn’t respond to a request for comment.

Arnold attributed the market’s rough year to a dearth of new stand-alone VR headsets that could excite users and a continued lack of a breakout app that has wide appeal among mainstream consumers.

Meta debuted the Quest 3 VR in October, starting at $499, or $200 more than where the predecessor Quest 2’s base model was initially priced in 2020. Sales have at least been strong enough to help lift the VR market during the pivotal holiday period, even if the year overall has been week.

Andrew Bosworth, Chief Technology Officer of Facebook, speaks during Meta Connect event at Meta headquarters in Menlo Park, California on September 27, 2023.

Josh Edelson | AFP | Getty Images

During an eight-week period spanning October and November, sales of VR headsets in the U.S. were $271 million, a 42% jump from the $191 million generated during the same period last year, Circana data showed.

Arnold said that the design and appeal of VR headsets has significantly improved over the years, and that “the products are progressing along a timeline that makes sense.”

“If there’s a challenge there, it’s how do you get great content for this hardware, how do pull some of those levers that enable a developer to put more resources into building a game or some kind of experience,” Arnold said. “That’s a little bit about the economics, and it’s about how many people are gravitating towards this platform or this particular device, and if I’m a developer, is that worth my while.”

Meta is hoping the Quest 3 will inspire developers to create compelling apps and games that utilize the device’s so-called passthrough feature, which allows for augmented reality experiences that mix digital graphics with real-world experiences. Numerous developers who attended Meta’s Connect conference in September said the passthrough technology represented an upgrade from the Quest 2.

Bosworth wrote in his blog post that, “Within months of the Meta Quest 3 launch, seven of the top 20 apps are mixed reality apps.” He added that Meta is “seeing strong signals that people really value these experiences.”

Bosworth said Meta is testing generative AI technologies in its newest Ray-Ban smart glasses to help people translate foreign languages “or come up with a funny caption for a photo you’ve taken.”

“Ray-Ban Meta smart glasses will let AI see the world from our perspective for the first time,” he wrote.

The company’s second-generation Ray-Ban glasses were released in October with a starting price of $299. Meta is hoping the devices offer another path for Zuckerberg to realize his metaverse vision, which has thus far been tethered to Quest headsets.

Here comes Apple

Heading into 2024, the big wild card for the VR market is Apple.

In June, Apple unveiled its Vision Pro mixed-reality headset, which is slated to hit the market next year at a starting price of $3,499.

The premium price suggests Apple is targeting early adopters, developers and companies as potential customers, VR developers told CNBC at Meta’s Connect event. VR enthusiasts are excited about Apple’s first headset, considering the company’s smashing success with consumer devices, and Vision Pro’s potential to integrate with products like the iPhone and iPad.

Apple didn’t respond to a request for comment.

The Vision Pro’s debut could also play a pivotal role in bolstering the fledging VR and AR market in 2024, according to research from IDC. In a September news release about the state of the market, Ramon Llamas, IDC research director, said, “Apple’s entry next year will bring much needed attention to a small market, but it will also force other companies to compete in different ways.”

Andrew Boone, an analyst at JMP Securities, said he was initially so impressed by Apple’s Vision Pro demos that he began to worry about Meta’s future in the market.

His thought at first was, “Apple was so far ahead that maybe Meta would just throw in the towel,” Boone said.

“I think my tone on that has changed,” he said. “I think the price was too high to actually get mass demand, so Zuck is going after a different version of this. Clearly, the Quest is more game focused.”

Apple CEO Tim Cook: We're excited about what we're seeing from Vision Pro developer labs

Boone says there’s “enough differentiation” between the Quest and Vision Pro devices that they can cater to different crowds, though he expects to learn a lot more about the VR market over the next 12 months.

Rolf Illenberger, CEO of German VR startup VRdirect, said companies are excited about the Vision Pro “because it’s Apple,” but there’s a perception that it’s more of a “lifestyle” device. Apple’s demos highlighted more entertainment-friendly uses like the ability to watch movies on a giant virtual display. Apple describes the Vision Pro as a “spatial computer,” capable of blending the physical world with digital content and visuals.

“That product is premium, so it also got people thinking about what does an ultra-premium experience look like and what are the use cases that arise from that,” said Circana’s Arnold.

High hopes for the enterprise

Illenberger sees the potential for Meta’s Quest 3 to make a splash in the enterprise for tasks like workforce training, onboarding and marketing. He noted that the device is $500 cheaper than the Quest Pro, which was released in 2022 as more of a business-focused device, and has many of the same features.

The consumer is more challenging. Aside from “early adopters and hardcore gaming kids,” Illenberger says, “there’s not enough convincing arguments to spend even $500 on VR.”

In the corporate VR market, Meta and Taiwan’s HTC are the leading suppliers of devices. Pico-branded headsets from TikTok parent ByteDance “are losing more and more ground,” Illenberger said. ByteDance has reportedly canceled the next version of its Pico headset and is instead shifting resources to another device more similar to Apple’s Vision Pro.

ByteDance didn’t respond to a request for comment.

When it comes to selling to businesses, Illenberger says Meta is starting to benefit from its name change in late 2021. He said that Zuckerberg’s rebranding has had a “psychological” impact on some companies who feel more more comfortable purchasing the devices without the tarnish of Facebook’s brand and the numerous associated data privacy scandals

“Rebranding the company to Meta was a genius move,” Illenberger said. “Not because he’s claiming the market for his company, but people more and more forget that Meta is in fact Facebook.”

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Inside a Utah desert facility preparing humans for life on Mars

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Inside a Utah desert facility preparing humans for life on Mars

Hidden among the majestic canyons of the Utah desert, about 7 miles from the nearest town, is a small research facility meant to prepare humans for life on Mars.

The Mars Society, a nonprofit organization that runs the Mars Desert Research Station, or MDRS, invited CNBC to shadow one of its analog crews on a recent mission.

MDRS is the best analog astronaut environment,” said Urban Koi, who served as health and safety officer for Crew 315. “The terrain is extremely similar to the Mars terrain and the protocols, research, science and engineering that occurs here is very similar to what we would do if we were to travel to Mars.”

SpaceX CEO and Mars advocate Elon Musk has said his company can get humans to Mars as early as 2029.

The 5-person Crew 315 spent two weeks living at the research station following the same procedures that they would on Mars.

David Laude, who served as the crew’s commander, described a typical day.

“So we all gather around by 7 a.m. around a common table in the upper deck and we have breakfast,” he said. “Around 8:00 we have our first meeting of the day where we plan out the day. And then in the morning, we usually have an EVA of two or three people and usually another one in the afternoon.”

An EVA refers to extravehicular activity. In NASA speak, EVAs refer to spacewalks, when astronauts leave the pressurized space station and must wear spacesuits to survive in space.

“I think the most challenging thing about these analog missions is just getting into a rhythm. … Although here the risk is lower, on Mars performing those daily tasks are what keeps us alive,” said Michael Andrews, the engineer for Crew 315.

Watch the video to find out more.

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Apple scores big victory with ‘F1,’ but AI is still a major problem in Cupertino

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Apple scores big victory with 'F1,' but AI is still a major problem in Cupertino

Formula One F1 – United States Grand Prix – Circuit of the Americas, Austin, Texas, U.S. – October 23, 2022 Tim Cook waves the chequered flag to the race winner Red Bull’s Max Verstappen 

Mike Segar | Reuters

Apple had two major launches last month. They couldn’t have been more different.

First, Apple revealed some of the artificial intelligence advancements it had been working on in the past year when it released developer versions of its operating systems to muted applause at its annual developer’s conference, WWDC. Then, at the end of the month, Apple hit the red carpet as its first true blockbuster movie, “F1,” debuted to over $155 million — and glowing reviews — in its first weekend.

While “F1” was a victory lap for Apple, highlighting the strength of its long-term outlook, the growth of its services business and its ability to tap into culture, Wall Street’s reaction to the company’s AI announcements at WWDC suggest there’s some trouble underneath the hood.

“F1” showed Apple at its best — in particular, its ability to invest in new, long-term projects. When Apple TV+ launched in 2019, it had only a handful of original shows and one movie, a film festival darling called “Hala” that didn’t even share its box office revenue.

Despite Apple TV+ being written off as a costly side-project, Apple stuck with its plan over the years, expanding its staff and operation in Culver City, California. That allowed the company to build up Hollywood connections, especially for TV shows, and build an entertainment track record. Now, an Apple Original can lead the box office on a summer weekend, the prime season for blockbuster films.

The success of “F1” also highlights Apple’s significant marketing machine and ability to get big-name talent to appear with its leadership. Apple pulled out all the stops to market the movie, including using its Wallet app to send a push notification with a discount for tickets to the film. To promote “F1,” Cook appeared with movie star Brad Pitt at an Apple store in New York and posted a video with actual F1 racer Lewis Hamilton, who was one of the film’s producers.

(L-R) Brad Pitt, Lewis Hamilton, Tim Cook, and Damson Idris attend the World Premiere of “F1: The Movie” in Times Square on June 16, 2025 in New York City.

Jamie Mccarthy | Getty Images Entertainment | Getty Images

Although Apple services chief Eddy Cue said in a recent interview that Apple needs the its film business to be profitable to “continue to do great things,” “F1” isn’t just about the bottom line for the company.

Apple’s Hollywood productions are perhaps the most prominent face of the company’s services business, a profit engine that has been an investor favorite since the iPhone maker started highlighting the division in 2016.

Films will only ever be a small fraction of the services unit, which also includes payments, iCloud subscriptions, magazine bundles, Apple Music, game bundles, warranties, fees related to digital payments and ad sales. Plus, even the biggest box office smashes would be small on Apple’s scale — the company does over $1 billion in sales on average every day.

But movies are the only services component that can get celebrities like Pitt or George Clooney to appear next to an Apple logo — and the success of “F1” means that Apple could do more big popcorn films in the future.

“Nothing breeds success or inspires future investment like a current success,” said Comscore senior media analyst Paul Dergarabedian.

But if “F1” is a sign that Apple’s services business is in full throttle, the company’s AI struggles are a “check engine” light that won’t turn off.

Replacing Siri’s engine

At WWDC last month, Wall Street was eager to hear about the company’s plans for Apple Intelligence, its suite of AI features that it first revealed in 2024. Apple Intelligence, which is a key tenet of the company’s hardware products, had a rollout marred by delays and underwhelming features.

Apple spent most of WWDC going over smaller machine learning features, but did not reveal what investors and consumers increasingly want: A sophisticated Siri that can converse fluidly and get stuff done, like making a restaurant reservation. In the age of OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini, the expectation of AI assistants among consumers is growing beyond “Siri, how’s the weather?”

The company had previewed a significantly improved Siri in the summer of 2024, but earlier this year, those features were delayed to sometime in 2026. At WWDC, Apple didn’t offer any updates about the improved Siri beyond that the company was “continuing its work to deliver” the features in the “coming year.” Some observers reduced their expectations for Apple’s AI after the conference.

“Current expectations for Apple Intelligence to kickstart a super upgrade cycle are too high, in our view,” wrote Jefferies analysts this week.

Siri should be an example of how Apple’s ability to improve products and projects over the long-term makes it tough to compete with.

It beat nearly every other voice assistant to market when it first debuted on iPhones in 2011. Fourteen years later, Siri remains essentially the same one-off, rigid, question-and-answer system that struggles with open-ended questions and dates, even after the invention in recent years of sophisticated voice bots based on generative AI technology that can hold a conversation.

Apple’s strongest rivals, including Android parent Google, have done way more to integrate sophisticated AI assistants into their devices than Apple has. And Google doesn’t have the same reflex against collecting data and cloud processing as privacy-obsessed Apple.

Some analysts have said they believe Apple has a few years before the company’s lack of competitive AI features will start to show up in device sales, given the company’s large installed base and high customer loyalty. But Apple can’t get lapped before it re-enters the race, and its former design guru Jony Ive is now working on new hardware with OpenAI, ramping up the pressure in Cupertino.

“The three-year problem, which is within an investment time frame, is that Android is racing ahead,” Needham senior internet analyst Laura Martin said on CNBC this week.

Apple’s services success with projects like “F1” is an example of what the company can do when it sets clear goals in public and then executes them over extended time-frames.

Its AI strategy could use a similar long-term plan, as customers and investors wonder when Apple will fully embrace the technology that has captivated Silicon Valley.

Wall Street’s anxiety over Apple’s AI struggles was evident this week after Bloomberg reported that Apple was considering replacing Siri’s engine with Anthropic or OpenAI’s technology, as opposed to its own foundation models.

The move, if it were to happen, would contradict one of Apple’s most important strategies in the Cook era: Apple wants to own its core technologies, like the touchscreen, processor, modem and maps software, not buy them from suppliers.

Using external technology would be an admission that Apple Foundation Models aren’t good enough yet for what the company wants to do with Siri.

“They’ve fallen farther and farther behind, and they need to supercharge their generative AI efforts” Martin said. “They can’t do that internally.”

Apple might even pay billions for the use of Anthropic’s AI software, according to the Bloomberg report. If Apple were to pay for AI, it would be a reversal from current services deals, like the search deal with Alphabet where the Cupertino company gets paid $20 billion per year to push iPhone traffic to Google Search.

The company didn’t confirm the report and declined comment, but Wall Street welcomed the report and Apple shares rose.

In the world of AI in Silicon Valley, signing bonuses for the kinds of engineers that can develop new models can range up to $100 million, according to OpenAI CEO Sam Altman.

“I can’t see Apple doing that,” Martin said.

Earlier this week, Meta CEO Mark Zuckerberg sent a memo bragging about hiring 11 AI experts from companies such as OpenAI, Anthropic, and Google’s DeepMind. That came after Zuckerberg hired Scale AI CEO Alexandr Wang to lead a new AI division as part of a $14.3 billion deal.

Meta’s not the only company to spend hundreds of millions on AI celebrities to get them in the building. Google spent big to hire away the founders of Character.AI, Microsoft got its AI leader by striking a deal with Inflection and Amazon hired the executive team of Adept to bulk up its AI roster.

Apple, on the other hand, hasn’t announced any big AI hires in recent years. While Cook rubs shoulders with Pitt, the actual race may be passing Apple by.

WATCH: Jefferies upgrades Apple to ‘Hold’

Jefferies upgrades Apple to 'Hold'

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Musk backs Sen. Paul’s criticism of Trump’s megabill in first comment since it passed

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Musk backs Sen. Paul's criticism of Trump's megabill in first comment since it passed

Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.

Kevin Dietsch | Getty Images

Tesla CEO Elon Musk, who bombarded President Donald Trump‘s signature spending bill for weeks, on Friday made his first comments since the legislation passed.

Musk backed a post on X by Sen. Rand Paul, R-Ky., who said the bill’s budget “explodes the deficit” and continues a pattern of “short-term politicking over long-term sustainability.”

The House of Representatives narrowly passed the One Big Beautiful Bill Act on Thursday, sending it to Trump to sign into law.

Paul and Musk have been vocal opponents of Trump’s tax and spending bill, and repeatedly called out the potential for the spending package to increase the national debt.

On Monday, Musk called it the “DEBT SLAVERY bill.”

The independent Congressional Budget Office has said the bill could add $3.4 trillion to the $36.2 trillion of U.S. debt over the next decade. The White House has labeled the agency as “partisan” and continuously refuted the CBO’s estimates.

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The bill includes trillions of dollars in tax cuts, increased spending for immigration enforcement and large cuts to funding for Medicaid and other programs.

It also cuts tax credits and support for solar and wind energy and electric vehicles, a particularly sore spot for Musk, who has several companies that benefit from the programs.

“I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!” Trump wrote in a social media post in early June as the pair traded insults and threats.

Shares of Tesla plummeted as the feud intensified, with the company losing $152 billion in market cap on June 5 and putting the company below $1 trillion in value. The stock has largely rebounded since, but is still below where it was trading before the ruckus with Trump.

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Tesla one-month stock chart.

— CNBC’s Kevin Breuninger and Erin Doherty contributed to this article.

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