Amidst the backdrop of artificial intelligence (AI) spurring rapid advancements in hardware innovation, Meta is scaling back its metaverse initiatives and ramping up its investments in AI-driven hardware. Sources with inside knowledge reveal that Meta is contemplating a 30% reduction in the budget allocated to its metaverse business team in 2026. This move is set to impact the virtual world platform, Meta Horizon Worlds, as well as the research and development (R&D) team behind the Quest series of virtual reality (VR) products. Layoffs within these teams could commence as early as January 2026.

Since redirecting its focus toward metaverse development in 2021, Meta's Reality Labs division has incurred losses surpassing $70 billion. The market's reception to its metaverse offerings has fallen far short of the company's expectations. In a parallel move, Meta has recently acquired Limitless, a company specializing in AI-powered wearable devices. Limitless is renowned for its AI-driven pendant capable of recording conversations. One of its flagship products, the Pendant, boasts the ability to transcribe recordings in real-time. Meta has announced its intention to integrate the Limitless team into the wearable division of Reality Labs. This strategic move aims to expedite the development of AI-powered wearable devices, bolster technologies related to voice recording, transcription, and summarization, and foster enhancements in personal AI assistants and interactive experiences.