Meta (META) is reportedly set to make cuts to its metaverse efforts as the company continues to push deeper into the AI space.
CEO Mark Zuckerberg is looking to reduce the budget for the metaverse unit and move funding over to the company’s AI and smart glasses initiatives, sources told Yahoo Finance.
Bloomberg initially reported the change.
Meta stock popped more than 3% on the news.
The company had no comment on the report.
Read more about Meta’s stock moves and today’s market action.
Zuckerberg famously changed the name of his company from Facebook to Meta in 2021 as part of his full-throated support for plans to create a collection of interconnected virtual worlds where users would meet, chat, work, and play as digital avatars.
It also followed a period of tumult at then-Facebook related to product and user safety.
But the metaverse concept didn’t take off. Meta’s Reality Labs segment has lost billions of dollars over the years, including $4.4 billion in its most recent quarter. It generated just $470 million in sales during the period.
Virtual reality headsets haven’t caught on among consumers as much as other tech products, such as smartphones. According to IDC, the market for AR/VR headsets and displayless smart glasses is expected to grow 39.2% in 2025 to 14.3 million units. For comparison, the global smartphone market is expected to ship as many as 1.25 billion units.
Instead, the AR/VR displayless smart glasses market is being primarily driven by shipments of smart glasses like Meta’s Ray-Bans, which feature built-in speakers, microphones, and AI capabilities. Growth for that segment is expected to grow much as 247.5%
In September, Zuckerberg unveiled Meta Ray-Ban Display glasses, $799 smart glasses that feature a built-in display, allowing users to view messages and navigate using a handful of apps. Google and Samsung are also working on their own smart glasses. Apple is also reportedly developing its own smart eyewear.
Zuckerberg’s order comes as Meta continues to pour money into its artificial intelligence efforts. The company is standing up or renting out data centers across the country, including its Hyperion data center, which Meta is funding via a financing deal with Blue Owl.
Meta has been hiring aggressively to fulfill its AI ambitions and is looking to push further into the consumer product space, hiring away Apple’s design executive Alan Dye, according to Bloomberg’s Mark Gurman.
The company has also spent lavishly on poaching AI experts from a slew of firms, including rival OpenAI (OPAI.PVT).