Meta scales back metaverse spending following reports of cutting budget by up to 30%

Meta is dialing back its metaverse ambitions and redirecting resources toward AI-powered glasses and wearable technology, the company told FOX Business on Thursday.

The shift follows reports that Meta could slash as much as 30% from its metaverse group, an area CEO Mark Zuckerberg has previously touted as the company’s future.

While the tech giant did not confirm specific figures, the company said adjustments would take place within Reality Labs, its division responsible for augmented- and virtual-reality projects.

"Within our overall Reality Labs portfolio, we are shifting some of our investment from the metaverse toward AI glasses and wearables given the momentum there. We aren’t planning any broader changes than that," a Meta spokesperson told FOX Business.

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According to Bloomberg, the 30% proposed reductions are part of Meta’s 2026 budget planning, and cuts of this magnitude could include layoffs as early as January.

Investors appeared to welcome the news, sending Meta’s shares up 4%. The increase may be signaling relief that the company is scaling back a costly metaverse project, which has lost more than $60 billion, while indicating a shift toward more disciplined and strategic spending, according to Reuters.

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Meta has reportedly faced challenges in selling its vision of an immersive metaverse and expanding beyond the gaming community. However, the company has seen early success with its smart glasses, explaining the company’s decision to shift resources toward the wearable tech segment, Reuters added.

In contrast, competitors such as Google, Apple and Snap have faced challenges in turning their initial products into commercially successful offerings, the outlet added.

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The announcement comes as Meta is ramping up efforts in the race for artificial intelligence (AI), following reports of a lukewarm reception to its Llama 4 model. 

Zuckerberg previously announced that the company committed up to $65 billion in capital expenditures this year, while the broader tech industry is projected to spend roughly $400 billion on AI in 2025, Reuters added.

FOX Business' Breck Dumas and Reuters contributed to this report.