Meta Reduces Metaverse Budget by Up to 30%, Shifts Focus to AI Initiatives

Meta Platforms is planning to reduce its metaverse budget by up to 30%, according to reports from Bloomberg News. This decision is part of the company's 2026 budget planning and may result in layoffs as early as January.

The budget cuts are expected to affect various aspects of Meta's Reality Labs division, including the Horizon Worlds virtual platform and the Quest hardware unit. The company has invested heavily in its augmented-reality division since rebranding in 2021, with more than $60 billion spent since 2020.

In response to these developments, Meta's stock rose nearly 4%, adding approximately $69 billion in market value. Analyst Craig Huber of Huber Research commented, "Smart move, just late."

Meta is also shifting some investment from the metaverse toward artificial intelligence (AI) initiatives, including AI-powered glasses and wearables. A company spokesperson stated, "Within our overall Reality Labs portfolio, we are shifting some of our investment from the metaverse toward AI glasses and wearables given the momentum there."

This strategic shift aligns with Meta's broader push to enhance its AI capabilities and infrastructure. The company plans to spend up to $65 billion this year to expand its AI infrastructure, aiming to bolster its position against rivals in the AI sector.