XtraProfit News — United States
Meta is preparing to significantly reduce spending on its metaverse initiatives as the company shifts more aggressively toward artificial intelligence, according to people familiar with internal discussions.
Sources say the tech giant is reviewing budget cuts of up to 30% for Reality Labs, the division behind the company’s virtual-reality hardware and software. The reductions could lead to staff cuts early next year and are expected to affect teams working on the Quest headset line and the Horizon Worlds virtual platform.
Stock Reaction Positive
News of the potential cutbacks drew a strong response from investors. Meta shares rose sharply after early reports emerged, adding tens of billions of dollars to the company’s market value. For years, investors have questioned the scale of spending on the metaverse, a project that has yet to achieve widespread adoption despite heavy investment.
A Strategic Shift Toward AI
The planned reductions come as CEO Mark Zuckerberg increases Meta’s commitment to AI development. The company is investing heavily in computing infrastructure, new AI models, and features that integrate generative AI into Facebook, Instagram, and WhatsApp.
A key part of this strategy is the development of AI-powered wearables. Meta recently created a new design studio focused on next-generation smart devices and hired a prominent design leader from Apple to help accelerate the effort. The company’s Ray-Ban smart glasses, one of the brighter spots in the Reality Labs portfolio, have gained traction thanks to integrated AI capabilities.
Metaverse Struggles Drive Rethinking
Meta’s pivot comes after years of slow progress in its virtual-reality business. Reality Labs has recorded sizeable financial losses since 2021, as technical limitations and limited consumer demand slowed adoption of the company’s early metaverse concepts.
Although Zuckerberg has argued that avatars and virtual environments will eventually play a role in how AI systems interact with users, Meta appears to be reassessing how much it wants to spend on long-term, experimental projects.
More Changes Expected
The company has already undergone several restructurings and rounds of layoffs as it rebalances its priorities. Analysts say further changes are likely as Meta ramps up spending on AI research and infrastructure — an area that, while promising, remains costly.
Meta has declined to comment on the potential budget cuts. Final decisions are expected in the coming months as the company prepares its 2025 spending plan.
