Meta “Steps Back” From the Metaverse, Shares Rise 4% on Wall Street
Reality Labs has racked up heavy losses since it launched. In the most recent quarter alone, it reported a loss of $4.4 billion.
Quick overview
- Meta Platforms is cutting its budget for metaverse initiatives, leading to a 4% increase in its stock price.
- Zuckerberg is considering a 30% reduction in funding for Reality Labs, which has reported significant losses.
- The company is shifting focus towards artificial intelligence, building new data centers and hiring AI experts.
- While the metaverse has struggled, smart glasses like the Meta Ray-Ban show promising growth potential.
Meta Platforms announced that it will cut the budget for its metaverse business—a move that lifted its shares on Wall Street.
Meta Platforms, the tech giant led by Mark Zuckerberg, is preparing deep cuts to its metaverse-related initiatives as it increasingly shifts its priorities toward artificial intelligence. The decision was welcomed by investors, who pushed Meta’s stock up 4%.
According to Bloomberg, Zuckerberg is considering reducing the budget for Reality Labs—the division behind Meta’s virtual and augmented reality projects—by as much as 30%.
The company declined to comment on the report. Since its landmark 2021 decision to rebrand Facebook as Meta, Zuckerberg had bet on transforming digital interaction through a virtual ecosystem where users could socialize, work, and be entertained through avatars. But that ambitious vision never gained the expected traction.
Meta’s metaverse business fails to take off
Reality Labs has racked up heavy losses since it launched. In the most recent quarter alone, it reported a loss of $4.4 billion, while generating only $470 million in revenue.
The market for virtual reality headsets has also lagged behind early expectations. Although IDC projects 39.2% growth for 2025—reaching 14.3 million units—the figure pales in comparison with the global smartphone market, which could reach around 1.25 billion units sold.
Smart glasses, however, have shown more promising momentum. Driven primarily by devices like the Meta Ray-Ban, the segment of glasses without built-in displays could expand by 247.5%.
This growing interest encouraged Zuckerberg to unveil the Ray-Ban Display in September, a $799 model with an integrated screen and AI features that will compete with ongoing developments from Google, Samsung, and Apple.
A shift in direction
The metaverse cuts coincide with Meta’s accelerated push into artificial intelligence. The company is building and leasing new data centers—including Hyperion, financed through a deal with Blue Owl—to meet its growing computational demands.
It is also hiring aggressively. Recently, Meta brought in renowned Apple designer Alan Dye and recruited AI experts from several companies, including OpenAI.
Meta’s strategic pivot is becoming clear: the company is moving past its metaverse expansion phase and embracing a transition toward AI-driven products and services—an area that now captures both global tech competition and investor interest.
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