Meta Platforms Cuts Metaverse Spending, Focuses on AI

The tech giant is scaling back its metaverse investments to prioritize artificial intelligence.

Jan. 30, 2026 at 12:07pm

Got story updates? Submit your updates here. ›

Meta Platforms, formerly known as Facebook, has announced layoffs within its Reality Labs division, which focuses on the metaverse. The company has spent billions on the metaverse with limited results, and is now redirecting investments towards its augmented reality glasses and artificial intelligence efforts. While Meta isn't abandoning the metaverse entirely, the cuts suggest a shift in priorities as the company looks to become more efficient and profitable.

Why it matters

Meta's pivot away from the metaverse and towards AI could signal a broader rethinking of the company's strategy. The metaverse has been a major focus and investment area, but with limited returns so far, Meta is looking to streamline its operations and focus on more profitable segments like its Family of Apps business. This could help improve the company's overall financial performance and make the stock more attractive to investors.

The details

Meta recently announced it would be laying off 10% of employees from its Reality Labs business, which oversees the company's metaverse efforts. While Meta isn't abandoning the metaverse entirely, it plans to redirect the savings from these job cuts towards its augmented reality glasses project. The company is also ramping up spending on artificial intelligence, seeing it as a more promising area for growth and innovation compared to the metaverse.

  • In 2021, Meta Platforms underwent a major rebrand and pivot towards the metaverse.
  • In 2025, Meta's Reality Labs division incurred losses totaling $19.2 billion, an 8% increase from the previous year.
  • In late 2022, Meta announced layoffs within the Reality Labs division.

The players

Meta Platforms

The parent company of Facebook, Instagram, WhatsApp, and other social media and technology platforms. Formerly known as Facebook, the company rebranded in 2021 to focus on the metaverse.

Reality Labs

The division within Meta Platforms that oversees the company's metaverse and augmented reality efforts, including the development of VR headsets and AR glasses.

Family of Apps

Meta's core social media and messaging platforms, including Facebook, Instagram, WhatsApp, and Messenger, which generate strong profits to offset losses in the Reality Labs division.

Got photos? Submit your photos here. ›

What they’re saying

“Until Meta firmly makes a plan to exit the metaverse entirely, I'd avoid the stock. Not only is the metaverse still a significant part of its business, but with the company also spending heavily on AI, my concern is that the business isn't being run as efficiently as it could be, and there may be more attractive AI stocks to invest in.”

— David Jagielski, CPA

What’s next

Meta has not provided details on any further planned cuts to its metaverse investments, but investors will be closely watching to see if the company continues to scale back its Reality Labs division in favor of AI and its core social media platforms.

The takeaway

Meta's pivot away from the metaverse and towards AI reflects a broader rethinking of the company's strategy as it looks to become more efficient and profitable. While the metaverse remains a focus, the cuts to Reality Labs suggest Meta is prioritizing more promising areas like AI and its established social media business.