Meta Stock Surges as Zuckerberg Scales Back Metaverse Spending

Meta Platforms is preparing deep cuts to its metaverse budget. The move marks a strategic reversal for CEO Mark Zuckerberg. The news comes from internal discussions reported by Bloomberg. According to Reuters, this signals a clear shift in company priorities.

Investors reacted immediately and positively to the reports. Meta’s stock price surged approximately 6%. The market sees this as a move toward fiscal discipline. It ends years of massive spending on virtual reality projects.

Reality Labs Faces 30% Budget Reduction

Executives have discussed cutting the Reality Labs budget by up to 30% for 2026. This division handles Meta’s metaverse and VR projects. It includes the Quest headset line and the Horizon Worlds platform. The cuts would represent a historic pullback.

Reality Labs has been a huge financial drain. It has accumulated over $70 billion in losses since 2020. The division lost $4.4 billion in the third quarter of 2025 alone. Its revenue remains a fraction of its enormous costs.

The proposed cuts would likely trigger significant layoffs. Sources say reductions could begin as early as January 2026. A final decision on the scale is still pending. The division will become a smaller, more focused unit.

Investors Cheer the Strategic Pivot to AI

The market’s positive reaction was swift and clear. Meta’s share price jumped on the Bloomberg report. This reflects longstanding investor frustration with metaverse spending. Capital is now expected to flow toward more profitable areas.

The primary beneficiary will be Meta’s artificial intelligence initiatives. The company plans enormous capital expenditures for AI data centers. This investment could reach $72 billion in 2025. AI offers clearer near-term business applications than the metaverse.

This pivot does not mean Meta is abandoning virtual reality entirely. Augmented reality and smart glasses remain long-term interests. However, the “metaverse-first” vision is effectively over. The company’s focus is now squarely on AI and its core advertising business.

This major metaverse budget cut concludes a costly chapter for Meta. It demonstrates Zuckerberg’s pragmatic response to market pressure and financial reality. The company’s future is being rewritten around artificial intelligence.

Info at your fingertips

Why is Meta cutting its metaverse budget now?

Investor pressure and massive financial losses forced a rethink. Reality Labs burned over $70 billion with little return. The slower-than-expected adoption of VR technology also played a key role.

What will happen to the Quest VR headset?

The Quest product line will likely continue but with fewer resources. Development may slow, and the team could face layoffs. The focus will shift from building a metaverse to practical VR applications.

How much money will these cuts save?

A 30% reduction could save billions of dollars annually. Exact figures depend on the final approved budget. The savings will be redirected to AI infrastructure and other priorities.

Will there be layoffs in the metaverse division?

Yes, significant layoffs are expected if cuts proceed. They could start in early 2026. The scale will depend on the final budget decision from leadership.

What does this mean for Meta’s overall strategy?

It signals a fundamental shift from the metaverse to AI. Zuckerberg is prioritizing investments with clearer financial returns. The company’s name change now seems more symbolic than strategic.