Meta is weighing significant budget reductions for its metaverse division while
funneling resources into AI and smart wearables.
The Metaverse Still Alive, The Money Hose is Not
Meta spent years selling the metaverse as the next chapter of the
internet. It rebranded the entire company around it and poured astonishing sums
into Reality Labs, the division tasked with building that vision. The division
has logged losses north of 70
billion dollars since 2021. Investors gritted their teeth. Users were
politely indifferent. But Meta kept the faith.
Now Bloomberg
reports that faith may be running into balance sheet reality. According to
its early reporting, Meta is considering cutting as much as 30 percent of
Reality Labs spending as part of internal 2026 planning. These are discussions,
not executed decisions. Executives are weighing scenarios, not issuing
termination notices. Still, the scale of what is being discussed signals a
sharp change in mood.
Metaverse land buyers then and now pic.twitter.com/I8yx0SbdKz
— Tenacious (@TenaciousBit) December 4, 2025
The potential cuts would land squarely on the metaverse heartland.
Bloomberg says the funds for Quest hardware, Horizon Worlds, and other VR and
AR projects are being examined for reductions. The discussions reportedly
include the possibility of layoffs as soon
as January. That again is not confirmed, but it shows how aggressive the
planning conversations have become.
All of this is due to the slow adoption of virtual reality and the
stubborn lack of monetizable traction for metaverse products. A concept that
was meant to reshape daily life ended up feeling more like a very expensive
experiment. However, perhaps unsurprisingly, artificial intelligence (AI) is
also a factor.
[#highlighted-links#]
A Strategic Pivot That Feels Familiar
The renewed caution around the metaverse is happening in tandem with
rising enthusiasm for artificial intelligence. According to reports, Meta is
weighing reallocating resources toward “hardware,
software and AI integration for its interfaces”. This is a shift away from
fully immersive worlds and toward devices that use AI to mediate the real one; the
company is rebalancing rather than abandoning the category. Meta is still
building hardware, still working on glasses, still chasing the sci-fi
future. But AI is now the gravitational pull.
None of this should surprise investors. AI has delivered early returns
across the tech sector. The metaverse has not. If one side of the business is
outspending its results and the other is defining the zeitgeist, internal
planners are not likely to miss the lesson.
Perhaps unsurprisingly, Meta’s stock is up over 5% following the news. Investors love AI, it seems.
BREAKING: Meta stock, $META, surges over +5% after Mark Zuckerberg says the company is looking at cutting Metaverse efforts by up to 30%.The market has been waiting for this announcement for years. pic.twitter.com/WuItuSgxf1
— The Kobeissi Letter (@KobeissiLetter) December 4, 2025
Meta has not commented publicly on the planning discussions, and none
of the shifts described in the reporting are confirmed. Given the lack of a
response, this looks like a stage-setter for the strategic guidance Meta will
deliver in early 2026.
So What Now for The Metaverse?
If the metaverse was ever going to become a daily habit for millions of
people, Meta was the company with the best shot at making it happen. Now the
company appears to be weighing a future where virtual worlds get less oxygen
and AI takes center stage. That does not mean the dream is dead. It means the
dream is moving down the priority list.
$META‘S ZUCKERBERG PLANS UP TO 30% CUTS FOR METAVERSE EFFORTS – BLOOMBERG pic.twitter.com/99D6Xu2KX2
— Wall St Engine (@wallstengine) December 4, 2025
There is a difference between a full pivot and a resource rebalancing. It
seems that Meta still wants to shape the next computing platform. It just
appears less confident that the next leap will take place inside a headset and
more confident that it will be driven by AI.
Until Meta confirms its 2026 budget, all of this remains planning
chatter. But if the chatter proves correct, the era of metaverse maximalism may
be ending. In its place is something leaner, more cautious, and far more
aligned with what the market wants right now: AI that feels useful, not worlds
that feel empty.
This article was written by Louis Parks at www.financemagnates.com.
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