Meta‘s earnings report for the third quarter of 2025 caused its stock price to decline, but the tech giant did have some good news to report related to Reels. The vertical, short-form format, which brings the TikTok experience to apps like Facebook and Instagram, has achieved an “annual run rate of over $50 billion,” according to Meta Founder and CEO Mark Zuckerberg.
The annual run rate for a business refers to a yearly revenue total that is extrapolated from a shorter time period. So while it wouldn’t be quite accurate to say that Reels ads are now hauling in $50 billion per year, that figure could become valid as long as the format maintains its current trajectory. To put that number into perspective, YouTube’s annual run rate based on its recently reported Q3 ad revenue would total $41.04 billion.
Reels ads hit the mainstream in 2022, and Meta has spent the past three years honing that revenue stream. As with many facets of Meta’s business, generative AI has been put to work on Reels, where it is assisting the development of contextual ad products.
Those innovations helped Reels surpass 200 billion daily views in 2023. By Q4 2024, the format was one of the stars of Meta’s quarterly reports, a status that still seems to be active as of Q3 2025. Reels has become so valuable that Meta has considered moving the short-form videos to their own app. For now, however, Reels will stick around as a dependable revenue stream for creators on both Facebook and Instagram.
As far as the rest of the Meta-verse is concerned, the Q3 2025 earnings report was a mixed bag. Topline quarterly revenue reached $51.24 billion, which was nearly $2 billion higher than analyst estimates. Sales are up 26% year-over-year. According to CNBC, that’s Meta’s highest revenue growth since Q1 2024.
The bad news concerned Meta’s considerable investment in AI — and its hefty tax bill. After falling short of projections related to earnings per share, Meta execs cited several factors that impeded topline growth, including massive spending on AI projects and a $16 billion tax charge related to the Trump administration’s Big Beautiful Bill. The news triggered a stock market rout, with Wall Street operatives displaying their skepticism related to Meta’s future.
Are investors doubting Meta’s ability to get desirable results from its AI spending spree? The impact of AI on Reels shows that technological advancements can catalyze gains across the tech giant’s businesses, and the success of the “Vibes” feed shows that users are still curious about the potential of generative AI models. At the same time, AI is negatively affecting the user experience on Meta platforms by making them sloppier than ever. AI truly is a double-edged sword, and during the third quarter, Meta felt the bite from both sides of that blade.
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