Meta is weighing significant budget reductions for its metaverse division while funneling resources into AI and smart wearables.

The Metaverse Still Alive, The Money Hose is Not

Meta spent years selling the metaverse as the next chapter of the internet. It rebranded the entire company around it and poured astonishing sums into Reality Labs, the division tasked with building that vision. The division has logged losses north of 70 billion dollars since 2021. Investors gritted their teeth. Users were politely indifferent. But Meta kept the faith.

Now Bloomberg reports that faith may be running into balance sheet reality. According to its early reporting, Meta is considering cutting as much as 30 percent of Reality Labs spending as part of internal 2026 planning. These are discussions, not executed decisions. Executives are weighing scenarios, not issuing termination notices. Still, the scale of what is being discussed signals a sharp change in mood.

The potential cuts would land squarely on the metaverse heartland. Bloomberg says the funds for Quest hardware, Horizon Worlds, and other VR and AR projects are being examined for reductions. The discussions reportedly include the possibility of layoffs as soon as January. That again is not confirmed, but it shows how aggressive the planning conversations have become.

All of this is due to the slow adoption of virtual reality and the stubborn lack of monetizable traction for metaverse products. A concept that was meant to reshape daily life ended up feeling more like a very expensive experiment. However, perhaps unsurprisingly, artificial intelligence (AI ) is also a factor.

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A Strategic Pivot That Feels Familiar

The renewed caution around the metaverse is happening in tandem with rising enthusiasm for artificial intelligence. According to reports, Meta is weighing reallocating resources toward “hardware, software and AI integration for its interfaces”. This is a shift away from fully immersive worlds and toward devices that use AI to mediate the real one; the company is rebalancing rather than abandoning the category. Meta is still building hardware, still working on glasses, still chasing the sci-fi future. But AI is now the gravitational pull.

None of this should surprise investors. AI has delivered early returns across the tech sector. The metaverse has not. If one side of the business is outspending its results and the other is defining the zeitgeist, internal planners are not likely to miss the lesson.

Perhaps unsurprisingly, Meta's stock is up over 5% following the news. Investors love AI, it seems.

Meta has not commented publicly on the planning discussions, and none of the shifts described in the reporting are confirmed. Given the lack of a response, this looks like a stage-setter for the strategic guidance Meta will deliver in early 2026.

So What Now for The Metaverse?

If the metaverse was ever going to become a daily habit for millions of people, Meta was the company with the best shot at making it happen. Now the company appears to be weighing a future where virtual worlds get less oxygen and AI takes center stage. That does not mean the dream is dead. It means the dream is moving down the priority list.

There is a difference between a full pivot and a resource rebalancing. It seems that Meta still wants to shape the next computing platform. It just appears less confident that the next leap will take place inside a headset and more confident that it will be driven by AI.

Until Meta confirms its 2026 budget, all of this remains planning chatter. But if the chatter proves correct, the era of metaverse maximalism may be ending. In its place is something leaner, more cautious, and far more aligned with what the market wants right now: AI that feels useful, not worlds that feel empty.