Meta Platforms Inc. is reportedly considering budget reductions of up to 30% for its metaverse initiatives, according to a Bloomberg News report citing sources familiar with the matter. This potential move comes amidst discussions around the company’s annual budget planning for 2026, following a series of meetings at CEO Mark Zuckerberg’s estate in Hawaii last month.
Shares of Meta saw a boost, rising nearly 4% in morning trading, likely signaling investor optimism regarding the company’s financial adjustments. The metaverse initiative has become a significant focus for Meta, which rebranded from Facebook in 2021, but it has incurred substantial losses, reportedly exceeding $60 billion since 2020.
These cutbacks in the metaverse budget may include layoffs, potentially commencing as early as January, the report indicates. Despite the challenges, Meta remains committed to remaining competitive in Silicon Valley, particularly in the burgeoning field of artificial intelligence. This is underscored by the recent launch of its Superintelligence Lab, aimed at improving its AI offerings following the lukewarm reception of its Llama 4 model. The lab was established as part of a substantial $14.3 billion investment that secured a 49% stake in startup Scale AI, led by CEO Alexandr Wang.
Meta’s ability to adapt and recalibrate its focus could signal a positive direction as it navigates the competitive tech landscape. While the proposed cuts reflect the challenges within its metaverse strategy, they may also pave the way for a more sustainable and innovative approach moving forward.