Shift in Spending Signals Stronger Focus on AR Glasses and Artificial Intelligence
Meta’s stock climbed on Thursday following reports that the company may cut its metaverse budget by up to 30%, signaling a strategic shift toward augmented reality (AR) devices and artificial intelligence. The potential reallocation marks the most significant adjustment to Meta’s long-running metaverse ambitions since its 2021 rebrand.
According to multiple reports, Meta is evaluating budget reductions and possible layoffs within Reality Labs — the division responsible for its virtual and augmented reality projects. The majority of cuts would target its virtual reality unit, historically the largest drain on the company’s metaverse investment. Whilee no final decision has been reached, the restructuring could begin as early as January.
The company is expected to redirect a substantial portion of spending to AR glasses development, reflecting a pivot toward technologies with clearer near-term commercial potential.
Investor Response Turns Positive
Markets reacted sharply to the news. Meta’s shares jumped more than 5% at the opening bell before settling with a 3.4% daily gain, closing near $661. Investors have long expressed concern over the scale of metaverse spending, and the prospect of tighter cost controls appears to have strengthened sentiment.
Industry reports indicate that much of the expected competition around virtual reality has cooled. While Apple and Google were once viewed as aggressive rivals in VR device development, progress has reportedly slowed, reducing the competitive pressure once felt by Meta executives. The softer landscape is one reason behind the company’s reassessment of long-term metaverse investments.
Still, several firms continue to pursue metaverse-linked products. The AI startup Infinite Reality recently acquired Napster with plans for a music-driven virtual environment, and new trademark filings tied to DTTM Operations point to potential metaverse and NFT initiatives.
Despite cutting back on metaverse spending, Meta is not abandoning immersive technology. CEO Mark Zuckerberg announced the launch of a new creative studio within Reality Labs, dedicated to blending design, fashion and technology for next-generation wearable devices. He emphasized that AI-powered glasses will play a central role in how people interact with digital environments in the coming years.
The shift illustrates Meta’s evolving strategy: leaner metaverse investment, stronger focus on AI-driven hardware, and a more disciplined approach to emerging technologies as the company shapes its next phase of growth.
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