Meta cuts 1,500 jobs as CFO Susan Li signals Reality Labs pivot towards wearables

Meta has announced another round of layoffs, cutting around 1,500 jobs largely within its Reality Labs division, as the company reassesses its long-term investments in virtual reality and the metaverse after years of sustained losses in the unit. The move comes amid a broader effort to tighten spending and refocus on products that are showing stronger market traction, as outlined by company executives during Meta’s latest earnings call.

Meta chief financial officer Susan Li informed analysts that while the company remains committed to developing future virtual reality headsets, investment in the segment will be meaningfully reduced in the near term. She stated that Reality Labs spending will increasingly be directed towards wearables, particularly smart glasses, which have demonstrated stronger demand than VR hardware.

According to a Moneycontrol report, Li said Meta continues to see long-term potential in virtual reality but views wearables as a more immediate and scalable opportunity. She added that Reality Labs losses are expected to peak in 2026, with gradual reductions beginning from 2027 as tighter spending discipline takes effect.

Reality Labs has been a major financial drag on Meta’s overall performance. In 2025, the division reportedly posted losses of more than $19 billion, taking cumulative losses since 2020 to over $80 billion. Revenue from the unit has remained relatively limited, prompting internal restructuring.

As part of the job cuts, Meta shut down several VR-focused gaming studios, cancelled planned content initiatives and retired products including Horizon Workrooms, underlining a wider effort to streamline operations and concentrate resources on a smaller number of high-priority projects.

Meanwhile, wearables have emerged as a brighter spot for the company. While sales of VR headsets declined last year, Meta’s smart glasses recorded a sharp rise, with sales more than tripling year-on-year. Chief executive Mark Zuckerberg has repeatedly said that AI-powered glasses represent a key interface for the future of computing, marking a shift away from the company’s earlier metaverse-first strategy.

Meta has maintained that it is not abandoning virtual reality altogether, but its ambitions for the technology are now being shaped by stricter cost controls and more realistic timelines. With the layoffs completed and priorities reset, Reality Labs is entering a more constrained phase in which wearables, rather than VR, are expected to drive the business forward.