Meta’s suddenly pulling back hard on its metaverse plans. After pouring huge amounts of money into the idea, the company is now set to slash the team working on it, signaling they may finally be stepping away from the big bet that never really landed.
Bloomberg is reporting that Meta will shrink Reality Labs spending by approximately 30%, with the first round of reductions slated for early 2026. The bulk of the cuts will target two core initiatives: Horizon Worlds and Meta’s VR hardware roadmap.
According to a Meta spokesperson, the company is reallocating some investment from its metaverse initiatives to focus more on AI glasses and wearables, citing momentum in the category. Markets reacted positively, with Meta’s share price rising 3.4%.
The market’s response wasn’t unexpected. Since Meta began disclosing Reality Labs’ financial performance in late 2020, the division has accumulated an estimated $70-75 billion in operating losses. That spending has largely fueled Zuckerberg’s push toward a fully immersive virtual ecosystem.
Back then, Zuckerberg’s confidence seemed rock solid. He renamed Facebook to Meta in 2021 because he was sure the metaverse would be the next big tech platform, on par with smartphones. He even funded a report in 2023 that claimed the metaverse could add $760 billion to the U.S. economy by 2035.
Then everything flipped. Generative AI took off, and suddenly everyone in tech was talking about chatbots, agents, and automation, not digital avatars in a virtual playground. In a matter of months, the metaverse stopped feeling like the future.
Now Meta’s pouring its money into AI instead. The company bumped next year’s spending estimate to around $70-$72 billion, most of it going toward servers, data centers, and other AI-heavy infrastructure. It’s part of the same race every major tech player is trying to win.
The pullback from the metaverse may rank among the most expensive course corrections in modern tech. Even so, Zuckerberg hasn’t abandoned the underlying thesis. In a September statement, he acknowledged the possibility of “misspending a couple of hundred billion dollars,” but argued the strategic downside of inaction could be even greater.
Meta’s roadmap has shifted toward tangible consumer hardware. The company’s September announcements included the second-generation Ray-Ban Meta smart glasses and a deeper collaboration with Oakley. With increasingly integrated AI features, these wearables are positioned as the next phase of Meta’s hardware portfolio.
One era is ending, and another is kicking off. Meta, just like every other big tech player, is betting big that all the money it’s throwing at AI will actually pay off, and this time, they’re hoping the math works out.
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