Reality Labs bleeds $19.1 billion in 2025 as Meta reins in metaverse ambitions

Meta’s Reality Labs continues to rack up steep losses, offering fresh insight into why the company recently cut roughly 10 percent of its workforce in the division, reportedly impacting up to 1,000 employees.

In its fourth-quarter earnings released Wednesday, Meta reported that Reality Labs lost $19.1 billion in 2025, deepening from a $17.7 billion loss the previous year. The unit alone posted a $6.2 billion loss in the final quarter, underscoring the persistent gap between spending and revenue.

By comparison, Reality Labs generated just $955 million in Q4 revenue and roughly $2.2 billion over the full year, highlighting the scale of the financial imbalance.

Zuckerberg: Losses will persist, focus shifts to wearables

Speaking on the earnings call, CEO Mark Zuckerberg acknowledged that Reality Labs will remain heavily loss-making in the near term, even as Meta recalibrates its priorities.

The company plans to concentrate more of its investment on smart glasses and wearables, while continuing efforts to expand Horizon on mobile and move virtual reality toward eventual profitability.

Zuckerberg signaled that 2026 is unlikely to bring meaningful financial relief, saying losses are expected to remain broadly in line with last year and may only begin tapering off after hitting a peak.

Metaverse momentum fades as AI takes center stage

Meta’s aggressive bet on the metaverse in 2021 was met with skepticism from investors and industry observers, many of whom questioned both the technology’s readiness and the scale of the company’s spending.

Years later, that skepticism persists. Reality Labs continues to burn billions annually, while Meta increasingly positions artificial intelligence — rather than VR — as its primary growth engine.

Recent moves suggest the company is pulling back on some of its more ambitious VR initiatives. Reports indicate Meta plans to shut down several VR studios, and it has confirmed it will retire its standalone Workrooms app, once envisioned as a virtual collaboration platform for remote work.

An expensive experiment with no clear payoff

Despite ongoing investment in mixed reality and wearables, Meta has yet to outline a convincing roadmap for turning Reality Labs into a sustainable business.

As the company doubles down on AI and trims its VR footprint, its once-expansive metaverse vision appears increasingly constrained by financial pressure. For now, Reality Labs remains one of the most costly long-term bets in Big Tech, with profitability still a distant prospect.