Meta Platforms, under the leadership of Mark Zuckerberg, is undergoing a substantial restructuring as it shifts its focus from virtual reality to artificial intelligence. The company has laid off over 1,000 employees in its Reality Labs division, which is responsible for developing VR technologies and metaverse initiatives, representing approximately 10% of its workforce in that segment. This decision indicates a strategic pivot that prioritizes AI, a move that is likely to stir mixed reactions among investors.
Meta began notifying affected employees this week, as Chief Technology Officer Andrew Bosworth confirmed the layoffs in an internal memo. An all-hands meeting has been scheduled to discuss the changes and the future direction of the company. The restructuring marks a significant shift from Meta’s trajectory since 2020, during which the company invested more than $60 billion in its metaverse vision, yielding limited commercial results thus far.
With this pivot, capital is now being reallocated towards AI-driven projects, including enhancements in smartphone features and the development of smart glasses. The VR headset initiatives and related projects, however, are facing drastic cutbacks as the company seeks to optimize its investments. This renewed focus on AI comes as Meta’s capital expenditures are expected to soar from a forecasted $39.4 billion in 2024 to an estimated $70 to $72 billion in 2025, with projections suggesting that expenditures could exceed $100 billion by 2026.
Should investors sell immediately? Or is it worth buying Meta?
Despite generating approximately $110 billion in operating cash flow over the past twelve months, Meta faces a challenge in realizing concrete revenue streams from its AI investments. The company’s open-source Llama model is up against intense competition from established players like ChatGPT and Anthropic, making monetization efforts vital for sustaining investor confidence.
Attention is now focused on Meta’s upcoming financial results, set to be released on January 28, 2026, which will detail the company’s fourth-quarter and full-year performance for 2025. Investors are eager to see if the significant spending on AI will translate into improved monetization of its advertising platforms. Following a disappointing third-quarter report in October, Meta’s stock has struggled, trading at $620.25, approximately 22% lower than its all-time high of $796.25 achieved in August 2025.
The reorganization of AI teams into a new “Superintelligence Labs” division reflects Zuckerberg’s commitment to accelerating the company’s focus on AI technology. Whether this strategic shift will be enough to regain trust among investors remains a critical question as the financial community anticipates the forthcoming earnings release.
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