Meta is preparing to cut its metaverse budget by up to 30%, signaling a major strategic shift. Three years after prioritizing virtual reality, the company is now redirecting its investments towards artificial intelligence and augmented reality. This represents a significant change of course for Mark Zuckerberg, who is questioning the future of the metaverse, a move that has already boosted Meta’s stock.
In Brief
- •Meta is considering a 30% cut to its metaverse budget.
- •This budget cut would primarily affect the Reality Labs virtual reality (VR) unit.
- •The decision is part of a strategic shift towards artificial intelligence (AI) and augmented reality (AR).
- •Mark Zuckerberg confirmed the opening of a new creative studio dedicated to smart glasses design.
A Strategic Pullback on the Metaverse
Meta plans to reduce the budget of its Reality Labs division, which oversees its virtual reality projects, by up to 30%, while the company had already invested 15 billion to advance in the AI field.
This budget cut could take effect as early as January 2026, according to information reported by Bloomberg, as part of the company’s multi-year strategic planning. It would mainly impact the unit dedicated to virtual reality, which is the most resource-intensive within Reality Labs. Although no final decision has been made, layoffs are also being discussed internally. The announcement led to an immediate market reaction. At Thursday's opening session, META stock gained more than 5%, closing the day up 3.4% at approximately 661 dollars.
Several factors contribute to Meta’s strategic shift:
- •Wide-scale adoption of VR products has been lacking, limiting profitability prospects.
- •The initial enthusiasm for the metaverse has waned in tech and financial circles.
- •Diminishing ambitions of other industry giants, such as Google with Daydream and Apple with its XR projects, reduce competitive pressure.
- •Meta’s stock performance has improved (+5% at opening) in response to its spending rationalization, indicating market support for this repositioning.
This strategic decision comes amidst a general slowdown surrounding the metaverse. Such dynamics likely prompted Meta executives to ease up on a market where competition is no longer as aggressive, thereby reducing the pressure to innovate at all costs in the VR segment.
Meta Bets on Artificial Intelligence and Augmented Reality
In this phase of strategic adjustment, Meta is not just freezing projects. The company is actively reallocating its resources towards technologies considered more mature or promising, particularly augmented reality glasses and artificial intelligence tools.
Some of the funds recovered from VR will be directed to another Reality Labs division responsible for developing AR glasses. Mark Zuckerberg confirmed this direction in a Threads post, stating: "we are entering a new era where AI-powered glasses and other devices will change how we connect to technology and each other". He also announced the opening of a new creative studio within Reality Labs, focused on design, fashion, and technology.
Unlike the metaverse, which still has marginal public adoption, smart glasses and AI interfaces are seen as usage vectors more integrated into daily life. For Meta, the real challenge is now to offer natural, people-centered experiences, in Zuckerberg’s words.
By internalizing the design and development of these products, Meta aims to strengthen creative control and provide greater coherence to its hardware and software ecosystem. The focus is no longer on selling a futuristic dream, but on anchoring concrete uses in the current technological context.
This strategic refocus illustrates the adjustments of a giant facing market realities. While AI gains priority, the metaverse and Web3 remain in limbo. Their future will now depend on their ability to convince beyond initial promises.