Meta Prioritises AI, Cuts Metaverse

Meta is reportedly planning to slash spending on its metaverse division by up to 30% in 2026, signalling a major shift towards artificial intelligence. This decision follows substantial financial losses within Reality Labs, Meta's VR and metaverse-focused division, which has burned through billions since 2021. The company's stock price has seen a rise following the announcement.

The budget cuts may lead to layoffs as early as January and are part of Meta's 2026 planning cycle. The company is redirecting its focus to AI models, AI assistants, and related hardware, such as Ray-Ban smart glasses. Meta has also recruited AI talent, including executives from Apple, to lead its new AI initiatives.

This strategic pivot reflects a growing emphasis on near-term returns in AI, with Meta shifting its hardware strategy from VR headsets to AI-integrated wearables. The company's renewed focus on AI is also evident in Zuckerberg's public statements, with less emphasis on the metaverse and more on AI development.