According to Forbes, Meta is planning to slash its metaverse division’s budget by up to 30%. This comes just a few years after CEO Mark Zuckerberg renamed the company from Facebook to Meta and invested a staggering $10 billion into the virtual reality concept. During the company’s latest earnings call, the word “metaverse” wasn’t mentioned even once. The market’s immediate reaction was a nearly 3.5% jump in Meta’s stock price, as investors applauded the strategic shift away from a speculative bet and toward the current tech arms race in artificial intelligence.
Meta Isn’t Alone, This Is An AI Feeding Frenzy
Here’s the thing: this isn’t just about Meta admitting a mistake. It’s about the brutal, simple math of modern tech. AI is insanely expensive. We’re talking specialized chips, astronomical cloud compute costs, and salaries for a tiny pool of elite researchers. When you’re burning billions on that, you can’t also burn billions on a metaverse that’s, let’s be honest, not exactly printing money. The calculus is straightforward. Something had to give, and Zuckerberg chose the future he can actually compete in right now.
The Virtuous Cycle And The Vicious Squeeze
This move highlights a huge split in the competitive landscape. Companies with massive, profitable cloud businesses—think Amazon Web Services, Google Cloud, and Microsoft Azure—have a built-in advantage. Their cloud revenue funds their AI wars. It’s a virtuous cycle. But for everyone else? It’s a vicious squeeze. They have to fund AI from other parts of the business, which means cutting something. For Meta, that something was the metaverse. For others, it might be a profitable but “non-core” division.
And get this—even the leaders are sweating. The article points out that Microsoft’s CEO brought in a new advisor specifically to “rethink the new economics of AI.” If Microsoft is worried about sustainability, what does that say for the rest of the field? It tells you the resource pressure is universal.
What Gets Cut Next?
So the real question for the next year is: what else gets the axe? Annual planning and the usual January layoffs will provide cover for a lot of strategic repositioning. Will companies just cut obvious money-losers? Or will they make the harder call to sacrifice profitable legacy businesses that don’t feed the AI engine? How much of today’s revenue are CEOs willing to risk for a shot at tomorrow’s AI dominance?
These decisions will define the next decade of tech. In that light, Meta’s retreat looks less like a failure and more like a necessary, if late, adaptation. The metaverse isn’t dead. It’s just been benched because the game changed. The entire industry is now playing a different sport, one where the only ticket to compete is an astronomical pile of cash directed squarely at AI.
