Meta shares shot higher on Thursday after a new report suggested CEO Mark Zuckerberg is preparing to slash spending on the company’s once-hyped metaverse division — a sign that Meta is doubling down even harder on the AI race.
According to Bloomberg, Zuckerberg is considering cutting the metaverse budget by as much as 30%, a dramatic shift for a company that once rebranded itself entirely around the virtual-world concept.
Investors loved the news. Meta stock jumped more than 4% after the report surfaced.
Meta’s Metaverse Bet Never Paid Off
Zuckerberg renamed Facebook to Meta back in 2021, pitching a future where people would socialize, work, and play inside immersive digital worlds as avatars. The move also came during a turbulent period for Facebook as it faced rising scrutiny over safety and product issues.
But the metaverse never delivered the breakout moment Meta hoped for.
Reality Labs — the unit behind Meta’s VR headsets and virtual-world projects — has lost billions of dollars, including $4.4 billion just last quarter, while bringing in only $470 million in revenue.
Consumer interest has also been lukewarm. VR headsets continue to lag far behind mainstream tech categories like smartphones. IDC expects global AR/VR and display-less smart-glasses shipments to grow 39.2% in 2025 to about 14.3 million units, compared to an estimated 1.25 billion smartphone shipments worldwide.
Interestingly, it’s the smart glasses category — not full VR headsets — driving most of that growth. Products like Meta’s Ray-Ban smart glasses, which feature speakers, microphones, and AI tools, are expected to surge up to 247.5%.
A New Push Into AI — and a New Wave of Products
In September, Zuckerberg unveiled the Meta Ray-Ban Display, a $799 pair of smart glasses with a built-in display for messages and app navigation. Competitors aren’t far behind: Google, Samsung, and even Apple are all reportedly developing their own next-gen smart eyewear.
The spending cuts come as Meta pours massive resources into artificial intelligence. The company is building and leasing data centers across the U.S., including its Hyperion facility funded through a financing deal with Blue Owl.
Meta is also on a major hiring spree. To expand its AI ambitions, the company has poached talent from Apple — including design exec Alan Dye — and has spent aggressively to recruit top AI experts from across the industry, even from rival OpenAI.
