Meta layoffs: CFO Susan Li signals Reality Labs shift toward wearables after 1,500 job cuts

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• Meta lays off 1,500 staff, mainly from Reality Labs, amid restructuring
• Investment shifts from VR headsets to smart glasses due to stronger demand
• Reality Labs losses peaked at $19B in 2025; wearables now prioritized over VR

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Meta has announced another round of job cuts, laying off around 1,500 employees, primarily within its Reality Labs division. The move comes as the company continues to reassess its long-term bets on virtual reality and the metaverse, following years of heavy losses in the unit. During the company’s latest earnings call, Meta executives outlined a clearer shift in priorities, signalling tighter control on spending and a renewed focus on products that are already seeing market traction.

What Meta said about Reality Labs

Meta CFO Susan Li told analysts that while the company remains committed to building future VR headsets, investment in the segment will be “meaningfully reduced” in the near term. Instead, Reality Labs spending will increasingly favour wearables, particularly smart glasses, which have shown stronger demand compared to VR hardware.

According to Li, Meta continues to believe in the long-term potential of virtual reality but sees wearables as a more immediate and scalable opportunity. The company expects Reality Labs losses to peak in 2026, with gradual reductions beginning from 2027 as spending discipline improves.

Losses and restructuring details

Reality Labs has been a significant financial drag for Meta. In 2025 alone, the division reportedly lost over $19 billion, pushing cumulative losses since 2020 past $80 billion. Revenue, however, has remained limited in comparison, prompting internal restructuring.

As part of the layoffs, Meta shut down several VR-focused game studios, cancelled planned content projects, and retired products such as Horizon Workrooms. These steps underline a broader effort to streamline operations and concentrate resources on fewer, higher-priority initiatives.

Wearables gain momentum

While VR headset sales declined last year, Meta’s smart glasses performed notably better, with sales more than tripling year-on-year. CEO Mark Zuckerberg has repeatedly described AI-powered glasses as a key interface for future computing, marking a clear evolution from the company’s earlier metaverse-first narrative.

Meta maintains that virtual reality development is not being abandoned, but its ambitions are now tempered by cost controls and realistic timelines. With layoffs completed and priorities reset, Reality Labs is entering a more constrained phase, where wearables, rather than VR, are expected to carry the business forward.