Meta’s Strategic Pivot: From Virtual Worlds to AI Dominance

Meta Platforms Inc. is executing a significant strategic shift, moving its primary focus away from the metaverse and toward artificial intelligence. This realignment includes plans to reduce its workforce in the Reality Labs division by 10% to 30%, with cuts potentially starting as soon as January 2026. The market’s reaction to this corporate repositioning has been measured.

Robust Fundamentals Underpin the Shift

Despite the strategic redirection, the company’s core business remains strong. For the third quarter of 2025, Meta reported revenue of $51.24 billion, representing a 26% year-over-year increase. The number of ad impressions served across its platforms grew by 14%, while the average price per ad rose by 10%. Operating cash flow reached $30 billion.

Looking ahead, management provided fourth-quarter revenue guidance in the range of $56 to $59 billion. Capital expenditures for Q3 stood at $19.37 billion. For the full year 2025, the company anticipates spending between $70 and $72 billion, with plans for a “significantly higher” level in 2026 to fund the expansion of its AI infrastructure.

Reality Labs: A Costly Venture

The decision follows years of substantial investment in Reality Labs, the division responsible for virtual reality headsets and related social networking projects. Over the past four years, this unit has incurred losses exceeding $70 billion for Meta. These persistent losses have pressured the company’s overall margins, even as its main digital advertising operations continue to perform well.

Instead of continuing to channel vast resources into the metaverse, CEO Mark Zuckerberg is now emphasizing the augmented reality hardware business. The company intends to expand its Ray-Ban Meta Smart Glasses line. In a related move, Meta recently recruited former Apple designer Alan Dye to lead a new creative studio.

Forging AI Alliances with Media Giants

In a clear sign of its new direction, Meta entered into several commercial agreements with major media organizations in early December. Partners include CNN, Fox News, USA Today, People Inc., and Le Monde. These deals empower Meta’s AI to deliver real-time news responses through its chatbot, which is integrated across Facebook, Instagram, WhatsApp, and Messenger.

Should investors sell immediately? Or is it worth buying Meta?

These partnerships represent a notable reversal in strategy. Back in 2022, Meta had discontinued its program that paid news publishers. The company is now once again paying for content access to ensure its AI assistants remain competitive in a crowded field.

Technical Charts Flash a Cautionary Signal

From a technical analysis perspective, the stock presents a mixed outlook. A so-called “death cross” has appeared on the chart, with the 50-day moving average crossing below the 200-day moving average—a pattern not seen since May. Historically, this technical formation has often preceded periods of weaker performance.

Since reaching its all-time high of $796.25 in August 2025, Meta’s share price has declined by approximately 19%. It is currently trading within a support zone between $620 and $685.

Wall Street Maintains a Bullish Stance

Analyst sentiment remains overwhelmingly positive. Currently, 27 analysts rate the stock as a “buy,” with no “sell” ratings issued in recent months. The median price target among analysts is $825. Rosenblatt Securities holds the most bullish view with a target of $1,117, while Morgan Stanley maintains a more conservative target of $750, alongside an “overweight” rating.

Adding to shareholder returns, Meta announced on December 3 a quarterly cash dividend of $0.53 per share, payable on December 23.