Meta Shifts Firepower From Metaverse to AI
Meta (META) moved higher Wednesday after Bloomberg reported CEO Mark Zuckerberg is preparing major budget reductions across the company’s metaverse division — potentially trimming spending by as much as 30%.
The company declined to comment, but investors viewed the news as validation of Meta’s accelerating commitment to AI infrastructure, data centers, and long-term hardware strategy.
Zuckerberg’s 2021 pivot from Facebook to Meta was anchored in a vision of virtual worlds and avatar-driven social experiences. But the metaverse never delivered the scale or economics expected:
- Reality Labs has lost tens of billions, including $4.4B in the most recent quarter.
- Revenue remains minimal at $470M last quarter.
- VR adoption still lags core tech categories by orders of magnitude.
In contrast, Meta’s AI footprint is expanding rapidly — from hyperscale data centers to advanced research teams poached from OpenAI and other rivals.
VR Market Still Niche as Smart Glasses Gain Momentum
IDC data shows demand for VR headsets remains limited. AR/VR shipments are projected to reach 14.3M units in 2025, a fraction of the 1.25B smartphones expected globally.
The real growth is coming from smart glasses — an emerging category combining fashion form factors with embedded AI capabilities:
- Displayless smart glasses shipments are expected to grow over 247%.
- Meta’s Ray-Ban lineup has been the main driver of the category turnaround.
- September’s launch of Ray-Ban Display ($799) — complete with built-in screens — signals Meta’s focus on practical AI-driven wearables rather than fully immersive VR.
Google, Samsung, and Apple are all developing their own next-gen smart eyewear, intensifying competition.
AI Is Now the Center of Gravity at Meta
Meta is aggressively building and leasing capacity across the U.S., including its massive Hyperion data center funded through a financing partnership with Blue Owl.
The company is also in a hiring sprint:
- Poaching senior hardware talent, including Apple’s longtime design executive Alan Dye.
- Recruiting AI researchers and engineers at a pace matching other Big Tech players.
- Continuing to fund internally built AI models and consumer-facing experiences.
The shift is clear: the metaverse is no longer Meta’s primary long-term bet — AI is.
WSA Take
Meta’s pivot shows a company prioritizing ROI, scale, and near-term platform dominance over experimental moonshots. Investors want clarity on how AI will reshape Meta’s consumer ecosystem — and the budget reallocation signals discipline rather than retreat.
Meta’s high-cost metaverse chapter appears to be narrowing as AI becomes the company’s strategic core.
Read our recent coverage on WSA’s Midday Movers.
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