Mark Zuckerberg says Reality Labs losses will ease as Meta shifts focus

Meta chief executive Mark Zuckerberg has said the company’s loss-making Reality Labs division is approaching a turning point, with spending expected to peak before gradually declining. The comments follow fresh job cuts and a strategic shift away from virtual reality towards smart glasses and artificial intelligence-powered wearables.

Reality Labs has absorbed billions of dollars in investment over several years as Meta pursued its ambitions in immersive technologies. While the division continues to post heavy losses, Zuckerberg said changes underway would place it on a more sustainable footing over time, even if meaningful improvement will not be immediate.

Reality Labs losses expected to peak

Speaking during Meta’s fourth-quarter earnings call, Zuckerberg acknowledged the scale of Reality Labs’ losses, which exceeded US$19 billion in 2025 alone. He told investors that the company does not expect a rapid turnaround but believes the worst of the financial impact is close.

“For Reality Labs, we are directing most of our investment towards glasses and wearables going forward, while focusing on making Horizon a massive success on mobile and making VR a profitable ecosystem over the coming years,” Zuckerberg said. “I expect Reality Labs losses this year to be similar to last year, and this will likely be the peak, as we start to reduce our losses going forward gradually.”

The comments followed a series of cost-cutting measures within the division. Earlier this month, Meta laid off more than 1,000 Reality Labs employees, shut down three virtual reality studios and confirmed plans to retire its virtual reality meetings app. The company also paused work on third-party headsets running its Horizon operating system, signalling a narrower approach to hardware and software development.

Shift towards glasses, wearables and AI

Instead of pushing further into standalone virtual reality devices, Meta is now concentrating on smart glasses and other wearables that align more closely with its broader artificial intelligence strategy. Zuckerberg suggested these products have shown stronger commercial momentum and clearer paths to mass adoption.

During the earnings call, he said sales of Meta’s smart glasses “more than tripled” in 2025. While he did not provide specific figures, he presented the growth as evidence that consumer interest is building in more lightweight, practical devices.

Zuckerberg also outlined his long-term vision for augmented reality glasses, describing products that could act as constant AI companions. “They [AI glasses] are going to be able to see what you see, hear what you hear, talk to you and help you as you go about your day and even show you information or generate custom UI right there in your vision,” he said.

These ambitions fit with Meta’s wider push into what Zuckerberg has previously described as AI “superintelligence”. By embedding AI into everyday devices, the company believes it can reach hundreds of millions of users without relying on bulky headsets that have struggled to gain mainstream appeal.

Horizon and a quieter metaverse narrative

Although Meta is moving away from some of its earlier virtual reality plans, Zuckerberg argued that past investments are not being abandoned. Instead, he said the technology and experience gained from virtual worlds would complement the company’s AI efforts, particularly through the Horizon platform.

“You can imagine … people being able to easily, through a prompt, create a world or create a game, and be able to share that with people who they care about,” he said. “And you see it in your feed, and you can jump right into it, and you can engage in it.”

He added that such experiences could exist across both 2D and 3D formats, with Horizon acting as a bridge between immersive environments and more traditional mobile content. “Horizon, I think, fits very well with the kind of immersive 3D version of that,” Zuckerberg said, while also pointing to a future where videos could be tapped and entered as interactive spaces.

Notably, Zuckerberg avoided using the word “metaverse” during the discussion, a term that once dominated Meta’s public messaging. The omission suggests a deliberate effort to reposition the company’s strategy around AI-driven experiences rather than a single overarching concept. For investors and employees alike, the message was clear. While Reality Labs will continue to consume significant resources, Meta believes its most expensive bets are finally beginning to align with a more realistic path forward.