Meta Platforms moved to trim roughly 10% of its Reality Labs workforce this week, a shift that reflects a broader reallocation of capital and talent toward artificial intelligence.
The strategic pivot is framed by persistent operating losses tied to Reality Labs. Reports noted cumulative losses since 2020 exceed $70B, with a $4.4B loss in Q3 2025 cited as a recent example. Executives are said to be redirecting resources to AI development and infrastructure that promise nearer-term commercial returns.
Reports said the planned reduction would affect about 10% of Reality Labs, or roughly 1,500 employees of an estimated 15,000 staffers. The layoffs were reported Jan. 12–13 and were expected to be announced as early as Jan. 13, 2026.
The cuts are concentrated in teams working on virtual-reality headsets and the VR-based social platform Horizon Worlds, while groups focused on augmented-reality wearables — notably the Ray-Ban Meta AI glasses — are reportedly being spared. ‘Meta has declined to comment,’ according to one report.
The move responds to mounting losses in the metaverse effort and an intensified company-wide AI buildout, sources told multiple outlets. Meta declined to comment on the staffing plan, the reports added.
Why leadership is shifting funds to AI
That reallocation includes large-scale investment in data-center capacity and an aggressive hiring push for AI researchers — described in the reporting as ‘tens of billions’ in planned spending. To support energy-intensive AI operations, Meta has also pursued strategic power agreements with firms such as Oklo and TerraPower, aiming to secure up to 6.6 gigawatts of capacity by 2035.
The Ray-Ban Meta AI glasses were singled out as a product with clearer revenue potential: Meta has said those devices have sold more than 2 million units, according to one source. The company is also developing AI models to enhance avatar realism and on-device capabilities, signaling an effort to fuse AI with future XR experiences rather than abandon immersive platforms entirely.
Market response to the announcements was positive: coverage reported a notable uplift in Meta’s equity as investors rewarded the emphasis on AI over longer‑term metaverse spending.
For traders and corporate treasuries, the immediate implications include potential pressure on suppliers to the VR supply chain and a reweighting of capital allocation toward AI infrastructure partners.
Investors are now watching Meta’s AI capital deployment and its energy contracts — including the plan to secure up to 6.6 GW by 2035 — as the concrete test of whether the company can translate a strategic pivot into sustainable revenue and improved margins.
