In Q1 2022, Meta’s (FB) metaverse business — known as Reality Labs — operated at a loss of nearly $3 billion, causing skepticism in the market about whether the metaverse truly has a place in the digital future. Meta CEO Mark Zuckerberg noted that costs in the present are “laying the groundwork” for this technology to hit the mainstream.
In spite of the skepticism, Qualcomm (QCOM) CEO Cristiano Amon agrees that the best has yet to come for metaverse adoption and investment.
“It’s real, it’s going to be a very big opportunity,” Amon told Yahoo Finance Live. “We started investing in fundamental technologies that allow the merger of physical and digital spaces over a decade ago. It’s no secret that because of those early investments, for the over 40 virtual reality and augmented reality devices that exist in the world, [they are] all powered by Qualcomm.”
Amon joined Yahoo Finance Live from the 2022 Milken Institute Global Conference in Los Angeles in an exclusive interview with Yahoo Finance’s Alexandra Garfinkle. Amon discussed the company’s presence in the auto industry, partnerships, competition, and the metaverse.
And while Meta’s $3 billion bill for Reality Labs in the first quarter of 2022 may seem hefty, the business lost more than $10 billion throughout 2021. Horizon Worlds, Meta’s flagship VR social app, piloted creator monetization features late in the quarter and is expected to launch a web version to extend access to those who do not own an Oculus Quest 2 or similar headset. The platform reached a milestone of 300,000 users earlier this year.
According to Amon, Qualcomm continues to maintain existing and secure new partnerships with industry giants like Meta and Microsoft (MSFT) to provide hardware and software for their extended reality (XR) businesses.
“One of our biggest partnerships is with Meta,” he said. “We have had a very successful partnership with them for VR with the Quest and the Quest 2. We announced at CES that we’re now doing a custom chip for augmented reality with Microsoft as the Microsoft HoloLens gets ready to scale, and we announced a partnership, for example, [a partnership] with ByteDance for VR for Tiktok.”
The Federal Reserve raised interest rates by 0.50% on Wednesday in an effort to pump the brakes on surging inflation. In light of the Fed’s hawkish interest rate hike campaign, uncertainty remains in regard to metaverse investment as investors begin to favor value over growth stocks.
The issuance of exchange-traded funds like the ProShares Metaverse ETF (VERS) demonstrates that some investors, both institutional and retail, recognize the opportunity in metaverse. However, the fund and similar ETFs like it have been hammered by macroeconomic conditions.
In any case, Amon maintains optimism for the future of metaverse and XR technology.
“We have a number of different developments to eventually be able to create companion to your smartphone with fully immersive augmented reality glasses that actually is going to look like [normal glasses],” he said. “And I think that’s a big opportunity. It could be as big as phones.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV