According to Fortune, Meta’s Mark Zuckerberg is planning deep cuts to the company’s metaverse efforts, with executives considering budget reductions as high as 30% for the group next year. This division includes the Horizon Worlds virtual platform and the Quest VR unit, and cuts of that magnitude would likely trigger layoffs as early as January. The proposed reductions are part of Meta’s annual budget planning for 2026, discussed at meetings in Zuckerberg’s Hawaii compound last month. While a standard 10% cut was requested company-wide, the metaverse group was asked to cut deeper due to a lack of expected industry competition. Following the news, Meta’s stock jumped as much as 5.7%, its biggest intraday gain since late July.
The Pivot Is Now Unmistakable
Here’s the thing: this isn’t just a budget trim. It’s the official, behind-the-scenes admission that the grand metaverse bet has failed to materialize. Zuckerberg basically staked the entire company’s identity on this idea back in 2021, rebranding Facebook as Meta and pouring over $70 billion into Reality Labs since. And for what? A virtual world that most people still find clunky, empty, and frankly, a bit silly. The silence from Zuck himself says it all—he’s stopped talking about the metaverse on earnings calls. Now, it’s all AI, all the time. The market’s reaction, with that sharp stock jump, tells you everything you need to know about what investors thought of this money pit.
So What Happens to VR and Horizon?
The report says the bulk of the cuts will hit the virtual reality group. That makes sense, as the hardware is where the real cash gets burned. But does this mean Meta abandons VR entirely? Probably not. I think they’ll try to salvage it by tightly coupling it with their new AI focus. Imagine VR experiences powered by super-smart AI agents, or those Horizon Worlds becoming a playground for AI. The vision shifts from “build a new digital continent” to “create a compelling AI hardware platform.” As for Horizon Worlds itself, it’s clearly on the chopping block. When analysts are publicly predicting you’ll “shutter” a project, and then you plan 30% cuts to its group, the writing is on the wall.
The AI Eclipse Is Complete
This is the real story. The metaverse is being cannibalized to feed the AI beast. Zuckerberg needs those billions for the compute costs of training giant models like Llama, for running Meta AI, and for developing AI hardware like the Ray-Ban smart glasses. One bucket is leaking; the other is on fire (in a good, investor-exciting way). You can’t fund both wars. So the long-term “future of human connection” gets defunded for the immediate, explosive trend that has everyone’s attention. It’s a brutal but rational reallocation of capital. The analyst quoted in the piece nailed it: shutting this down allows focus on what actually has momentum.
A Reckoning Long Coming
Let’s be honest, this has felt inevitable for a while. The metaverse push always seemed like a solution in search of a problem, or maybe a distraction from the company’s other, more pressing issues at the time. Now, with AI presenting a clear path and the metaverse failing to spark a competitive race, the calculus changed. Meta’s recent hire of a top Apple design exec is telling—it signals a commitment to *consumer hardware*, but likely of a more pragmatic, near-term variety than full-immersion VR. The dream of a Ready Player One-style metaverse isn’t dead at Meta, but it’s been severely downgraded from “company mission” to “maybe a side project.” And that’s a huge shift.
