Meta is eliminating approximately 1,800 roles in its Reality Labs division and shuttering three VR development studios as it accelerates investment in artificial intelligence. The move underscores a major realignment of resources toward high-growth AI ventures aligned with industry trends.
- Meta eliminated 1,800 jobs—35% of Reality Labs workforce—in early 2026
- Three VR studios, including locations in San Francisco and Seattle, were shut down
- AI-related R&D spending rose 68% YoY, now making up 42% of Meta’s total tech budget
- NVIDIA (NVDA) and AMD (AMD) stock gains of 4.6% and 3.9% followed the announcement
- Capital allocation now heavily favors AI infrastructure over consumer-facing VR initiatives
Meta has initiated a sweeping workforce reduction within its Reality Labs unit, cutting roughly 1,800 positions—about 35% of the division’s staff—as part of a broader strategic pivot toward artificial intelligence. Affected teams included those responsible for hardware development and content creation for Meta’s Quest headsets. Concurrently, the company has closed three internal VR studios, including one based in San Francisco and another in Seattle, sources familiar with the restructuring confirmed. The shift reflects Meta’s prioritization of AI-driven growth, with CEO Mark Zuckerberg repositioning the company's technology investments around large-scale AI training infrastructure. Internal data shows that capital expenditure on AI systems increased by 68% year-over-year in the final quarter of 2025, accounting for nearly 42% of total tech R&D spending. This aligns with rising demand for AI-enabled cloud services and next-generation models. The restructuring has immediate implications for semiconductor firms integral to AI chip supply chains. NVIDIA (NVDA) and AMD (AMD), key suppliers of GPUs used in Meta’s data centers, saw their stocks rise 4.6% and 3.9%, respectively, in after-hours trading following the announcement. Analysts suggest this reallocation signals strong confidence in AI’s long-term trajectory, even as immersive tech adoption slows. Investors are reassessing Meta’s growth potential, with the company now viewed as increasingly aligned with the AI boom. While the VR divestment may dampen near-term user engagement in metaverse platforms, the focus on AI infrastructure positions Meta to capture expanding demand in enterprise analytics, generative AI tools, and autonomous systems.