Meta is finally hitting the brakes on its metaverse spending spree, and Wall Street loves it.
Executives at Meta are weighing budget cuts off up to 30% for the metaverse group in 2026, a division that includes Horizon Worlds and the Quest VR hardware team.​
Behind the scenes, this is part of Meta’s regular 2026 budget planning, including meetings Mark Zuckerberg held with top executives at his Hawaii retreat.
While most departments had to find around 10% savings, the metaverse side will need to prepare for much deeper cuts. This is potentially nearly a third of its budget and likely layoffs as early as January.​
In practical terms, that means fewer resources for building virtual worlds and new VR headsets, and more scrutiny on every dollar that goes into Reality Labs, the division responsible for metaverse and hardware bets.
Why Meta is pulling back
Reality Labs has turned into a huge money loser, with a $4.4 billion loss in Q3 2025 alone, and over $70 billion lost since 2020. Metaverse products like Horizon Worlds and Quest headsets have not seen the mainstream excitement Meta hoped for, with user interest and industry competition both softer than expected.​
Meanwhile, artificial general intelligence is the new star of the show. Meta’s investors are far more excited about AI models, assistants, and smart glasses, which are bringing in real revenue and attention. It’s like Meta is putting its energy into its profitable ventures instead of a big, uncertain project.
How markets and users are reacting
As soon as the news hit about the potential 30% cut, Meta’s stock went crazy, gaining billions of dollars in a single day, rising over 6%. This seems to be the financial discipline investors have been waiting for, from a company that had been investing enormous amounts into a future that never quite happened.
For you as a user or developer, this does not mean Meta is abandoning VR or the metaverse. It means the era of unnecessary spending is over.
Expect a leaner, more selective strategy: fewer experimental bets, more focus on AI features, and a metaverse vision that grows slower, more cautiously, and with much tighter expectations around what actually works.​
