Meta to Slash Metaverse Funding, Shifts Big Bet to AI Wearables
Meta is cutting metaverse spending by 30% and pivoting sharply toward AI glasses and wearables as the company resets its long-term strategy.
Meta is preparing for one of its biggest strategic resets since rebranding from Facebook. Chief executive Mark Zuckerberg is reportedly planning to slash the company’s metaverse budget by as much as 30%, marking a major retreat from the virtual-world vision he once championed. Instead, the tech giant is shifting its focus—and investment—towards artificial intelligence, particularly AI-powered glasses and wearable devices.
The move, first highlighted in Bloomberg’s reporting, reflects internal discussions within Meta’s Reality Labs division, which oversees its metaverse, AR, and VR initiatives. These cuts, expected to begin early next year, may also lead to job losses across the unit as resources are redirected to higher-momentum projects.
Market Welcomes the Shift
Investors have broadly approved the pivot, with Meta’s stock climbing as much as 7% in early New York trading before closing 3.4% higher. The shift added nearly $60 billion to Meta’s market value in a single day, signalling strong market confidence that Zuckerberg is prioritising financial discipline after years of heavy metaverse spending.
A Meta spokesperson confirmed the strategic redirection, telling the Financial Times: “Within our overall Reality Labs portfolio, we are shifting some of our investment from Metaverse towards AI glasses and wearables, given the momentum there. We aren’t planning any broader changes than that.”
From Avatars to AI
The reallocation of resources aligns with Meta’s renewed emphasis on building next-generation smart devices. A new design studio has been established within Reality Labs to accelerate work on hardware integrated with advanced AI systems. Adding to this push, Meta recently hired Alan Dye, Apple’s former head of interface design and a key force behind the aesthetics of the iPhone and Vision Pro.
Zuckerberg has long been vocal about his belief in AI-powered glasses. He often describes them as future “personal superintelligence”—devices that could eventually replace smartphones and become the core of everyday digital interactions.
Meta’s Ray-Ban smart glasses, created in partnership with EssilorLuxottica, already hint at this future. The latest versions offer hands-free Meta AI support, real-time translation, and enhanced camera capabilities, making them one of the company’s few standout successes in an otherwise costly division.
Reality Labs Faces Hard Truths
Since the grand unveiling of the metaverse vision in 2021, Meta has poured billions into Horizon Worlds, VR hardware, and immersive digital experiences. Yet consumer enthusiasm never matched the company’s ambitions. Technical hurdles, safety challenges, and a lack of mass adoption have weighed heavily on Reality Labs, which has now accumulated losses exceeding $70 billion.
In recent years, Zuckerberg reframed his position, calling virtual reality and AI “related fields” that could strengthen each other. He pointed to Meta’s avatar research as groundwork for developing embodied AI agents. Despite this narrative, AI is now clearly taking center stage.
The company has invested extensively in data centers, hiring top AI researchers and building open-source models that power chatbots, recommendation tools, and broader platform features. While this push has sometimes rattled investors—most notably when increased AI spending plans tanked Meta’s stock in October—Zuckerberg remains committed.
A New Direction for 2026 and Beyond
As 2025 nears its end, Meta appears to be stepping back from the metaverse dream it once positioned as the future of the internet. In its place, Zuckerberg is betting on AI wearables as the next big leap, aiming to bridge digital and physical worlds without the pitfalls that haunted the metaverse rollout.
The vision of a virtual universe may be shrinking, but Meta’s ambitions in AI-driven hardware are expanding faster than ever.
