Meta Shifts From Metaverse to AI as Investors Demand Results

Updated: Dec 31, 2025 • Category: Tech News

Meta is scaling back parts of its metaverse push while redirecting investment toward artificial intelligence—especially AI glasses and wearables—marking a notable strategic shift as the company closes out 2025.

The change follows years of heavy spending inside Reality Labs, a division that has accumulated more than $60 billion in operating losses since 2020, keeping Wall Street focused on when (and how) these long-term bets turn into durable returns.

What’s changing at Meta

Reports indicate Meta is preparing metaverse budget cuts that could reach as high as 30% in upcoming planning cycles, even as AI becomes the primary priority across product roadmaps and infrastructure spending.

Meta has also publicly confirmed it is “shifting some” investment from metaverse work toward AI glasses and wearables, signaling that near-term momentum is increasingly tied to AI-first hardware.

Why the metaverse bet drew criticism

Reality Labs continues to post steep losses, including an operating loss of $4.97 billion in Q4 2024 on $1.1 billion in revenue, reinforcing concerns about the timeline for profitability.

Those losses have fueled a broader debate about whether Meta’s biggest experiments create clear consumer demand—or mainly function as costly R&D narratives that take years to pay off.

AI becomes the new centerpiece

Meta’s AI narrative has been building for more than a year, with the company emphasizing that AI is being embedded across products and that assistants like Meta AI are central to reaching billions of users.

At the same time, the company has told investors it plans major capital expenditures aimed at expanding compute infrastructure for AI, underlining how expensive the AI race has become.

What to watch next

How deep metaverse budget cuts go and whether they slow long-term AR/VR development.
Whether AI wearables become a real growth engine—or another long-horizon experiment.
How quickly Meta can translate AI investment into measurable revenue impact beyond advertising efficiency gains.