Meta Platforms (META.US) plans to drastically cut metaverse investment by up to 30% or increase its pre-market share price by more than 6%

Zhitong Finance App learned that, according to people familiar with the matter, it was once viewed by Meta Platforms (META.US) CEO Zuckerberg as the company's future “metaverse” project, which is about to usher in the largest strategic contraction in history. According to internal management discussions, the budget reduction for the metaverse sector in fiscal 2026 is likely to be as high as 30%, involving products including the virtual world platform “Horizon Worlds” and the Quest virtual reality equipment business. If the scale is cut, it is expected that a new round of layoffs will occur as soon as January next year, but the final plan has not yet been finalized.

People familiar with the matter said that this sharp cut is part of Meta's 2026 budget plan, and related discussions took place at Zuckerberg's Hawaii residence last month. Zuckerberg's demand that all business lines generally cut fees by about 10%. This is in line with the budget cycle of the past few years, but the metaverse division is being asked to further “cut”. The reason is that Meta has not seen the expected industry competition and market popularity, and related investment returns continue to be under pressure.

Reality Labs has accumulated losses of more than 70 billion US dollars and invested in the metaverse as a “sinking cost”

Since Zuckerberg changed Facebook's name to Meta and bet on the metaverse in 2021, the company's Reality Labs division (including VR headsets, AR glasses, and virtual worlds) has accumulated losses of more than 70 billion US dollars. However, there has been no explosive growth in the industry as a whole. Limited consumer applications and ongoing disputes over privacy and child safety have also left investors skeptical about the project for a long time.

Meta's stock price rose more than 6% in the premarket after news of related cuts broke, reflecting that the market generally viewed cutting the metaverse as a benefit, and believed that the company was finally starting to tighten the “leak bucket” of long-term losses.

Zuckerberg turns to fully bet on AI: large-scale models and generative AI products become the core

By contrast, Zuckerberg has rarely mentioned the “metaverse” in his public speeches in recent years. Instead, concentrated investment in large-scale AI models, generative AI products, and related hardware, including Llama models, Meta AI assistants, and devices closer to AI applications, such as Ray-Ban smart glasses, which have recently received attention.

Some analysts and investors have long called for Meta to shut down the Reality Labs business, which continues to burn money but has limited returns. Forrester vice president Mike Proulx even predicted in April this year that Meta would “shut down metaverse projects such as Horizon Worlds before the end of the year.” In his view, cutting down the metaverse will help Meta focus resources on its core AI business, which has the greatest potential for growth.

Senior management continues to strengthen the hardware layout: a major takeover of Apple's design executives

Even with drastic cuts in metaverse spending, Meta still retains its layout in the field of consumer-grade hardware, and has recently acquired its best-known design director from Apple. The signal is clear that the future hardware direction will revolve more closely around the AI ecosystem rather than the heavy virtual world.