Meta is formally sectioning off Horizon Worlds, the closest thing it has to a metaverse, from its Quest VR platform, according to a new blog post from Samantha Ryan, Meta’s VP of Content, Reality Labs. While the decision runs counter to Meta’s original plan to own an immersive virtual world that could serve as the future home for all online interaction, it fits with the recent cuts it made to its costly Reality Labs division, and Mark Zuckerberg’s public commitment to focus the company on AI hardware like smart glasses going forward.
“We’re explicitly separating our Quest VR platform from our Worlds platform in order to create more space for both products to grow,” Ryan writes in the blog post. “We’re doubling down on the VR developer ecosystem while shifting the focus of Worlds to be almost exclusively mobile. By breaking things down into two distinct platforms, we’ll be better able to clearly focus on each.”
Meta has been developing mobile and web versions of Horizon Worlds in parallel with its VR app since at least 2023. Switching Worlds to being a mobile-first software platform isn’t good for VR diehards, but it does make it a more natural competitor to something like Roblox or Fortnite, which also offer user-created and monetizable worlds and games. It’s also a business Meta believes it can more easily scale because of its ability to connect games to “billions of people on the world’s biggest social networks.”
While Meta shuttered several of its own VR game studios earlier this year, it still wants to support third-party developers publishing games on its platform. The company says new monetization tools, better discoverability, a “Deals” tab and more ways for developers to talk to their customers should help make a difference. Maintaining the Quest’s library of games could also be critical going forward. Business Insider reported in December 2025 that Meta was working on a gaming-focused Quest headset, and Meta CTO Andrew Bosworth confirmed earlier this February that the company still had multiple Quest devices on its roadmap.
Earlier this month, Meta laid off 10% of the staff for Reality Labs, its virtual reality unit, reportedly cutting as many as 1,000 employees. Now, in a development that seems directly related, the company has revealed that the unit lost many billions of dollars last year.
On Wednesday, Meta’s earnings report showed that its embattled virtual reality business had lost some $19.1 billion in 2025, which is slightly more than it lost in 2024 (that year, the losses hovered around $17.7 billion). In its fourth quarter, the unit posted a loss of $6.2 billion, the report shows.
Those losses stood against what the unit generated in sales: $955 million in Q4 and some $2.2 billion throughout 2025.
During the company’s earnings call on Wednesday, Mark Zuckerberg struck a tone of optimism for his company’s VR team while noting that losses in 2026 are expected to be very much the same.
“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, during the call. However, the CEO noted that losses were expected to continue. “I expect Reality Labs losses this year to be similar to last year,” Zuckerberg said, while noting that this year would “likely be the peak, as we start to gradually reduce our losses going forward.”
When Meta announced a pivot toward the “metaverse” in 2021, the move was regarded with a certain amount of skepticism and, during its first year of VR efforts, the company faced harsh criticism — even being referred to as an “international laughingstock.” Nearly half a decade later, that skepticism hasn’t exactly subsided. As the VR business continues to lose money and Meta continues an aggressive pivot away from VR and toward AI, it’s unclear what exactly will turn the ailing business around.
Last week, CNBC reported that, in addition to the layoffs, Meta had plans to shutter a number of its VR studios — another sign that the company’s interest in virtual reality is waning. The company also recently announced that it would be retiring its standalone Workrooms app — which the company had pitched to office workers as a VR space that could be used to hold meetings.
Mark Zuckerberg says there’s an end in sight to Reality Labs’ years of multibillion-dollar losses following the company’s layoffs to the metaverse division earlier this year. The CEO said he expects to “gradually reduce” how much money the company is losing as it doubles down on AI glasses and shifts away from virtual reality.
Speaking during Meta’s fourth-quarter earnings call, Zuckerberg was clear that the changes won’t happen soon, but sounded optimistic about the division that lost more than $19 billion in 2025 alone. “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,” he 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 gradually reduce our losses going forward.”
The company cut more than 1,000 employees from Reality Labs earlier this month, shut down three VR studios and announced plans to retire its app for VR meetings. Meta has also paused plans for third-party Horizon OS headsets. Instead, Meta is doubling down on its smart glasses and and wearables business, which tie in more neatly to Zuckerberg’s vision for creating AI “superintelligence.”
During the call, Zuckerberg noted that sales of Meta’s smart glasses “more than tripled” in 2025, and hinted at bigger plans for AR glasses. “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.
Zuckerberg has spent the last few years laying the groundwork for pivoting Meta’s metaverse work into AI. He offered one example if what the means for Meta’s Horizon app.
“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. And you see it in your feed, and you can jump right into it, and you can engage in it. And there are 3D versions of that, and there are 2D versions of that. And Horizon, I think fits very well with the kind of immersive 3D version of that.
“But there’s definitely a version of the future where, you know, any video that you see, you can, like, tap on and jump into it and, like, engage and kind of like, experience it in a more meaningful way. And I think that the investments that we’ve done in both a lot of the virtual reality software and Horizon … are actually going to pair well with these AI advances to be able to bring some of those experiences to hundreds of millions and billions of people through mobile.”
One thing Zuckerberg didn’t mention, though: the word “metaverse.”
As incredible a year as 2024 has been for Artificial Intelligence (AI) stocks, it’s entirely possible that 2025 could be even better. There is still a lot of momentum and plenty of positive catalysts are on the horizon that can spur more growth. This is a market that most major players believe will be massive. Analysis from Statista puts the market at $826 billion by 2030.
So, as we approach the end of the year, what companies are poised to see serious growth? While I don’t have a crystal ball, here are my top two picks.
Yes, Nvidia (NASDAQ: NVDA) still has room to run. The semiconductor giant is gearing up for another big year driven primarily by sales of the soon-to-be-released “Blackwell” architecture, the newest iteration of its flagship AI-powering chips.
A lot will be revealed in the company’s upcoming earnings next month and the guidance the company sets, but it seems that 2025 could see a significant jump in revenue as demand continues to be sky-high for its current “Hopper” chips despite Blackwell’s imminent release. The reported 12-month-long backlog for Blackwell orders should keep it so. Elon Musk, for instance, recently purchased 100,000 H100s — there is more than one version of each iteration of chip architecture — and plans on purchasing another 50,000 H200s soon.
Nvidia’s competitors are struggling to keep pace and I don’t see them materially eating into Nvidia’s market share in 2025. AMD is set to release its next-generation AI chip around the same time Blackwell finally ships. Here’s the catch: It will be a direct competitor of the H200, not the (Blackwell) B200. AMD is a full cycle behind at this point. This will likely narrow, but Nvidia has a lot of cash to fuel its pace of innovation that AMD can’t match. Last quarter, despite playing catch up, it spent about half of what Nvidia spent on research and development.
Take a look at this chart, which shows the massive amount of free cash flow (FCF) Nvidia has at its disposal to maintain its edge. Of course, money isn’t everything, but it sure helps.
NVDA Free Cash Flow Chart
Meta(NASDAQ: META) has received a lot of flack in recent years because of Mark Zuckerberg’s insistence that the metaverse is going to be the next big thing. It doesn’t seem like he’s right about this one — the company’s metaverse division, Reality Labs, posted a $4.5 billion loss last quarter.
But I don’t think this is quite the folly that many do; the metaverse still could be big. The reason I bring this up, though, is that it shows Meta isn’t afraid to take risks and bet big. Zuckerberg is applying the same attitude to AI, investing heavily in building out its Meta AI and eventually incorporating that technology into the work Reality Labs does.
The fact is, whether Reality Labs pays off or not, the company is still extremely profitable, seeing strong user and revenue growth across its bevy of social media platforms — the company makes its money by selling targeted ads on its platforms, something AI could make more efficient. It’s also one of the cheapest stocks in big tech. Of the major players, only Alphabet has a lower price-to-earnings ratio (P/E). I think that makes Meta an extremely attractive pick, regardless of what happens with Reality Labs.
However, Meta has the chance to marry AI and the metaverse, something that, if done well, could be a game changer for the company. To be clear, this is conjecture, but its possible that 2025 will see the company release a demo of something in this vein.
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Meta Platforms Inc Chief Executive Mark Zuckerberg told employees on Thursday that WhatsApp and Messenger would drive the company’s next wave of sales growth, as he sought to assuage concerns about Meta’s finances after its first mass layoffs.
Zuckerberg, addressing pointed questions at a company-wide meeting a week after Meta said it would lay off 11,000 workers, described the pair of messaging apps as being “very early in monetizing” compared to its advertising juggernauts Facebook and Instagram, according to remarks heard by Reuters.
“We talk a lot about the very long-term opportunities like the metaverse, but the reality is that business messaging is probably going to be the next major pillar of our business as we work to monetize WhatsApp and Messenger more,” he said.
Meta enables some consumers to speak and transact with merchants through the chat apps, including a new feature announced Thursday in Brazil. The company did not immediately respond to a request for comment on Thursday’s internal forum.
Zuckerberg’s comments there reflect a shift in tone and emphasis after focusing heavily on extended reality hardware and software investments since announcing a long-term ambition to build out an immersive metaverse last year.
Investors have questioned the wisdom of that decision as Meta’s core advertising business has struggled this year, more than halving its stock price.
In his remarks to employees, Zuckerberg played down how much the company was spending in Reality Labs, the unit responsible for its metaverse investments.
People were Meta’s biggest expense, followed by capital expenditure, the vast majority of which went to infrastructure to support its suite of social media apps, he said. About 20% of Meta’s budget was going to Reality Labs.
Within Reality Labs, the unit was spending over half of its budget on augmented reality (AR), with smart glasses products continuing to emerge “over the next few years” and some “truly great” AR glasses later in the decade, Zuckerberg said.
“This is in some ways the most challenging work … but I also think it’s the most valuable potential part of the work over time,” he said.
About 40% of Reality Labs’ budget went toward virtual reality, while about 10% was spent on futuristic social platforms such as the virtual world it calls Horizon.
Chief Technology Officer Andrew Bosworth, who runs Reality Labs, said AR glasses need to be more useful than mobile phones to appeal to potential customers and meet a higher bar for attractiveness.
Bosworth said he was wary of developing “industrial applications” for the devices, describing that as “niche,” and wanted to stay focused on building for a broad audience.
