TLDR
- Meta plans to reduce its metaverse-focused workforce by 10%.
- The job cuts will impact around 1,500 employees in the Reality Labs division.
- Meta is shifting its priorities toward artificial intelligence and wearables.
- The company aims to reallocate resources from its metaverse investments.
- Reality Labs has accumulated over $70 billion in losses since its inception.
Meta is preparing to reduce its workforce in the metaverse-focused division, signaling an increased focus on artificial intelligence. The company plans to cut about 10% of its Reality Labs unit, which is responsible for Meta’s virtual and augmented reality projects. This move is expected to affect around 1,500 employees and comes as the company shifts its priorities toward AI development.
Meta’s Metaverse Investment Faces Cuts
Meta’s Reality Labs division, which employs approximately 15,000 people, oversees the company’s VR and AR projects, including hardware like headsets and virtual spaces such as Horizon Worlds and Horizon Workrooms. With the planned reduction, Meta aims to allocate resources toward AI initiatives instead. In early December, reports indicated Meta was considering reducing its metaverse spending by up to 30%, further emphasizing its growing interest in AI.
Meta’s transition to AI is part of a broader effort to refocus its resources. The company’s investments in the metaverse have yet to meet user adoption goals, leading to increased scrutiny over its financial strategy. A report from The New York Times suggests that Meta could announce these job cuts as soon as Tuesday, as the company continues to pivot away from its virtual reality ambitions.
BREAKING: META $META PLANNING TO CUT AROUND 10% OF EMPLOYEES IN ITS REALITY LABS DIVISION, PER NYT.
Reality Labs has roughly 15,000 employees, so this could mean ~1,500 layoffs.
Cuts will disproportionately affect those working on VR headsets and the metaverse. Could be… pic.twitter.com/lQArx04Yg7
— WOLF (@WOLF_Financial) January 12, 2026
Shift Toward AI and Wearables
Meta’s recent strategy adjustments show a clear shift in its financial priorities. While Reality Labs will experience cuts, the company plans to invest more in its wearables business. This includes smart devices such as the Meta Neural Band, which blends wearable technology with AI, as part of a larger trend toward integrating artificial intelligence into everyday products.
Reality Labs has posted over $70 billion in losses since its inception in 2020, with the most recent financial report showing a $4.4 billion loss in Q3 2025. Despite the heavy losses, Meta continues to explore ways to reduce its reliance on the metaverse while increasing its focus on AI, which has shown more promise for the company’s future growth. This shift in priorities reflects the company’s ongoing efforts to balance its financial investments with technological innovation.
