Meta is redirecting a portion of its funding away from its ambitious metaverse projects and increasing its focus on AI‑driven smart glasses and wearable technologies, the company has confirmed. The move reflects Meta’s desire to take advantage of strong momentum in the emerging AI eyewear market and broader interest in wearable computing.
Over the past several years, Meta has poured billions of dollars into building the metaverse — a vision of interconnected virtual worlds accessed via virtual reality (VR) and augmented reality (AR) hardware. The metaverse was so central to the company’s long‑term plan that Facebook rebranded as Meta in 2021 to signal its strategic focus.
However, executives have struggled to convince investors of the commercial viability and rapid adoption of metaverse technology, especially as sales of VR headsets have been uneven and the immersive virtual world concept remains largely niche. As a result, Meta is now cutting back on its metaverse budget by up to 30% as part of its planning for 2026, according to people familiar with the discussions. These reductions are expected to affect key metaverse projects such as Horizon Worlds and the Quest VR platform and may include layoffs as early as January.
Instead of abandoning the concept entirely, Meta is reallocating part of those resources into the development of AI‑powered smart glasses and other wearable devices, which have shown stronger consumer interest and clearer near‑term business potential. A Meta spokesperson said the shift represents an adjustment within the company’s Reality Labs division — which houses both metaverse and wearable innovation efforts — and is motivated by growth opportunities in those segments.
Meta has stressed that virtual reality itself is not being dropped. The company’s Chief Technology Officer, Andrew Bosworth, has said that Meta will continue investing in both VR and AI hardware and that budget adjustments are part of regular annual planning to match market growth and opportunities.
Why the Change Matters
The reallocation comes as Meta aims to stay competitive in the fast‑moving artificial intelligence and wearable technology space. Its current smart glasses offerings, including the Ray‑Ban Meta series and Oakley Meta eyewear, have gained traction with features like music playback, photography, voice‑activated AI interaction, and advanced display capabilities.
The company is also rolling out enhanced software updates for its AI glasses, such as “Conversation Focus”, which uses directional microphones to help wearers hear the person they are speaking with more clearly in noisy environments, and Spotify integration that adapts music playback to what the user sees.
Additionally, Meta is working on next‑generation smart wearable features — including virtual handwriting recognition and Instagram Reels support for its Ray‑Ban Display glasses — expected to roll out in 2026. These updates aim to broaden the functionality and appeal of wearables beyond basic AR and VR use cases.
Investor and Market Response
The news of budget shifts has had a positive impact on Meta’s stock price, as investors welcomed a more focused approach to capital allocation, particularly toward areas with clearer commercial promise. Analysts have also pointed out that reducing metaverse expenses could improve Meta’s earnings per share and overall financial outlook for 2026.
Strategic Context
The shift highlights a broader industry trend in 2025 toward AI‑powered wearables and mixed‑reality hardware, as companies race to define the next major platform for computing. Meta’s renewed emphasis on AI eyewear and augmentation devices positions it against rivals such as Apple and Google, both of which are also developing smart glasses and wearable tech.
Summary: Meta is cutting back part of its metaverse investment — a long‑term but under performing bet — and reallocating some funding to AI smart glasses and wearable technology where it sees faster growth and market demand. Despite the shift, Meta says it continues to back both VR and wearable innovation as part of its broader strategy.
