Meta is cutting back on investment in virtual reality after it has lost about $70 billion cumulatively since 2020, with Mark Zuckerberg laying down a large bet on the quest to achieve domination in artificial intelligence at the expense of over 1000 jobs.
Layoff Shockwave
The Quest headsets and Horizon Worlds division, Reality Labs, has caused the company a lot of financial pressure, with the division suffering a cumulative loss of $70 billion and a quarterly loss of $4.4 billion compared to annual sales of $470 million.
The resultant cost-reduction has seen studios like Armature, Twisted Pixel, and Sanzaru be closed, and the Oculus Studios technology unit being closed. Ouro re-positioned its offerings to a mobile application and the fitness application Supernatural passed into a maintenance-only stage.
According to Bloomberg, Meta’s metaverse plans will now focus on mobile devices, which could mean a combination of its future wearables as well as existing mobile apps.
“With the larger potential user base and the fastest growth rate today, we are shifting teams and resources almost exclusively to mobile to continue to accelerate adoption there,” Bosworth wrote in a memo to staff.
AI Pivot Accelerates
To this, Zuckerberg is refocusing savings on artificial intelligence-based wearable technology, having spent $14.3 billion in Scale AI talent.
The capital outlays are also estimated to increase to $110-115billion in 2026, thus helping in the models creation like Avocado Meta and Essilor Luxottica are considering doubling the production capacity of their artificial intelligence-powered smart glasses to 20 million units annually by the end of this year,
“Avocado” is the internal codename for Meta’s forthcoming next-generation text-based large language model (LLM), which is expected to release in the first half of 2026.
Conflicts in the Metaverse Revealed
Horizon Worlds currently has less than 200,000 monthly active users by late 2022, which still significantly lowers the 151.1 million users of Roblox as of late 2025, even with the advertisements to mobile platforms and the distribution of funds to creators.
CSS Insight analyst Ben Hatton suggests that the mobile gaming boom forced Meta to change focus, and it is currently seeking Roblox creators to enable easier virtual experiences a la Minecraft. Hatton said
It kind of follows that Meta will be moving it towards mobile as mobile gaming has become very popular over the last five years or so .
Bleak Stock, Bright Outlook
The stock of the company dropped over 4% in early 2026, even below Alphabet and the Nasdaq index. However, the growth of AI capabilities such as the hiring of Alexandr Wang places Meta at a better position to challenge OpenAI as higher wearable technology means that young people will be involved in base applications.
It is believed that a mobile revival of Horizon and leading solutions to AI eye-wear will be realized by the year 2027 and hence revitalize previous VR spending into strategic capital-re-investments.
