Meta (META) Surges 3.43% as 30% Metaverse Spending Cut Drives AI-Focused Pivot

Meta Platforms (META) surged 3.4287% in pre-market trading on December 5, 2025, as reports indicated the company plans to cut spending on its metaverse initiatives by up to 30% in 2026. The move follows years of skepticism over the financial viability of its virtual reality projects, which have incurred over $60 billion in losses since 2020.

CEO Mark Zuckerberg reportedly requested a 10% company-wide budget reduction, with deeper cuts in Reality Labs, the division overseeing metaverse development. The strategy aims to redirect resources toward artificial intelligence, aligning with broader industry trends and investor demands for faster returns.

Analysts noted the shift reflects a pragmatic pivot from long-term bets to more immediate growth opportunities.

Investor sentiment improved despite ongoing antitrust scrutiny in the EU over WhatsApp’s AI policy. The stock’s pre-market rally highlighted confidence in Meta’s ability to streamline operations while prioritizing AI advancements, a sector now central to its competitive positioning. Layoffs in the metaverse division could follow, though final decisions remain pending.

Meta’s strategic reallocation of capital is drawing comparisons to recent shifts in AI-focused companies, with many observers emphasizing the importance of efficient resource management during uncertain economic conditions. While the metaverse remains an ambitious long-term vision, the shift toward AI is expected to yield more tangible results in the near term, satisfying shareholders who have grown increasingly impatient with the lack of financial returns from virtual reality projects.

The upcoming earnings report is likely to provide additional clarity on the success of the new budgetary measures and Meta’s broader strategic direction, offering investors a clearer picture of its path to profitability.