Meta to Slash Metaverse Budget by Up to 30%

Meta Platforms is expected to cut as much as 30% from its metaverse initiative budget, according to Bloomberg News, citing people familiar with internal planning discussions. The move comes as the company reassesses long-term investments in virtual worlds amid accelerating competition in artificial intelligence.

Shares of Meta rose 4% as investors welcomed the shift, following years of spending that surpassed $60B since 2020 on metaverse ambitions.

Budget Cuts Tie Into 2026 Planning Meetings

The proposed reductions are part of Meta’s annual 2026 budget planning, shaped during a series of meetings held at CEO Mark Zuckerberg’s compound in Hawaii last month.
Key expectations include:

Potential layoffs as early as January
A broad realignment of Reality Labs resources
A renewed emphasis on near-term revenue opportunities

Meta did not respond to Reuters’ request for comment.

Analysts View the Shift as Necessary

“This seems a major shift to align costs with a revenue outlook that is not as prosperous as management thought years ago,” said Craig Huber of Huber Research Partners.
He called the move “smart, just late,” reflecting the slowdown in business prospects for the metaverse.

Reality Labs Under Pressure

The metaverse division sits within Reality Labs, which produces:

Quest mixed-reality headsets
Smart glasses built with EssilorLuxottica’s Ray-Ban
Upcoming augmented-reality glasses

Meta has struggled to grow the audience for immersive virtual worlds beyond the gaming niche, despite multibillion-dollar investment.

Meta Holds Early Lead in Smart Glasses

While the metaverse vision has faced challenges, Meta has gained traction with smart glasses—outpacing early, less successful attempts from:

Alphabet’s Google
Apple
Snap

This product line remains one of the company’s bright spots in consumer hardware.

Pivot Toward AI Intensifies

The report comes as Meta pushes to reestablish itself in the AI race, especially after its Llama 4 model received a tepid response.
To support its ambitions:

Meta committed up to $72B in capital spending this year
Large tech firms collectively are expected to invest ~$400B in AI
The company reorganized AI teams under Superintelligence Labs, led directly by Zuckerberg
Zuckerberg is aggressively recruiting talent, even contacting prospects via WhatsApp with million-dollar offers

Additional Reuters Confirmation

A separate Reuters note reiterated that Zuckerberg is expected to meaningfully reduce resources allocated to metaverse development.