Meta Expected to Cut Up to 30% of Metaverse Budget

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Meta is expected to cut up to 30% of its metaverse budget after pouring billions into the initiative over the last five years.

Meta is expected to make budget cuts to its metaverse initiative of up to 30%, people close to the matter told Bloomberg. Shares of the Facebook parent company rose 4% as investors breathed a sigh of relief. CEO Mark Zuckerberg has poured billions into the initiative since 2020; the company even changed its name from Facebook to Meta in 2021.

Such a high percentage of cuts will most likely include layoffs beginning as early as January, Bloomberg cautioned. The proposed cuts are part of the company’s annual budget planning for 2026, which included a series of meetings in Hawaii at Zuckerberg’s compound last month.

“Smart move, just late,” said Huber Research Partners analyst Craig Huber. “This seems a major shift to align costs with a revenue outlook that surely is not as prosperous as management thought years ago.”

Meta—and specifically Zuckerberg—has struggled to peddle its vision for an immersive, interconnected metaverse. Its devices, such as the Reality Labs-produced Quest mixed-reality headsets, haven’t really taken off beyond a niche within the gaming community.

But as a silver lining, the efforts have provided Meta with an early lead in the smart glasses game compared to the initial attempts from competitors like Apple, Google, and Snap.

However, Meta has been fighting to maintain relevance amid the growing artificial intelligence race, especially after the company’s Llama 4 model was met with a lukewarm reception at best. As a result, Meta is shifting focus and recently reorganized its AI efforts under SuperIntelligence Labs.

Zuckerberg is now leading an aggressive talent acquisition as the company hones in on the latest trend. Meta has committed as much as $72 billion in capital spending this year and is courting prospects with million-dollar pay packages.