Will Cuts to the Metaverse Help Meta Platforms Stock Soar in 2026?

In 2021, Meta Platforms (NASDAQ: META) was truthful convinced of the imaginable successful the metaverse that it not lone invested heavy successful it but besides underwent a important rebranding and changed its sanction from Facebook to Meta Platforms. Since then, however, the company's Reality Labs division, which focuses connected the metaverse, has proven to beryllium not overmuch much than a wealth pit.

Now that the institution appears to beryllium focusing connected artificial quality (AI), however, the metaverse looks to beryllium little of a priority. Meta has been ramping up spending connected AI, and recently, it announced it would beryllium laying disconnected 10% of employees from its Reality Labs business. Could this beryllium the opening of larger reductions ahead, and could diminishing the Reality Labs conception beryllium a bully determination for the tech stock?

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Although Meta is making a sizable simplification to the headcount successful its Reality Labs division, the institution hasn't fixed up connected the metaverse conscionable yet, according to a study from The New York Times precocious past year. Instead, it is going to put the wealth it saves from the occupation cuts successful its augmented world glasses.

Rather than making important wholesale changes to its metaverse business, Meta appears to simply beryllium redirecting investments from 1 country to another; investors shouldn't brace for much important changes ahead. While immoderate investors whitethorn person preferred the institution simply bash distant with the money-losing segment, this alteration whitethorn astatine slightest beryllium a motion that the institution is being much cautious with its spending successful this area.

Meta Platforms has immoderate fantabulous societal media assets successful Facebook, WhatsApp, Instagram, and Messenger. Those marque up its Family of Apps business, which generates beardown profits that marque up for losses successful its Reality Labs division.

But the institution could beryllium overmuch much profitable than it presently is. Ditching the metaverse wholly could mean billions much successful income each quarter, which would construe into a much charismatic net aggregate and perchance a higher valuation. In 2025, the Reality Labs part incurred losses totaling $19.2 billion, an 8% summation from the $17.7 cardinal nonaccomplishment it posted successful the erstwhile year. By comparison, the Family of Apps conception generated a nett of $102.5 cardinal this past year.