Meta CTO Responds To The Speculation: "VR Is Not Dead"

Meta has confirmed it is shifting some Reality Labs investment "from Metaverse toward AI glasses and Wearables" amid media reports of up to a 30% cut; CTO Andrew Bosworth pushed back on narratives that VR is "dead," saying the company will continue investing across VR, glasses and AI while right‑sizing budgets. Reality Labs posted its highest quarterly revenue in Q4 2024 on Quest 3S sales, but Quest volumes fell year‑over‑year in the first half of 2025 (with a Q3 retail‑driven rebound) and Horizon Worlds has yet to scale broadly. By contrast, smart glasses are gaining clear traction—EssilorLuxottica reported 2 million Ray‑Ban Meta units sold and sales have more than tripled YoY—while Meta still plans new headsets (an ultralight H1 2027 device and a higher‑end Quest 4), indicating a strategic reallocation toward wearables where market demand and economics look stronger.

Analysis

Meta publicly confirmed it is "shifting some of our investment from Metaverse toward AI glasses and Wearables" after media reports suggested cuts to metaverse teams of up to 30%, and CTO Andrew Bosworth pushed back on the narrative that VR is "dead," characterizing the change as budget right-sizing rather than an abandonment of VR. Bosworth reiterated that Meta can invest concurrently in VR, glasses and AI and that teams are being asked to improve effectiveness against market size and growth expectations.

Reality Labs posted its highest-ever quarterly revenue in Q4 2024 driven by Quest 3S (the top-selling console on Amazon US at Christmas), but Quest unit sales fell year-over-year in the first half of 2025 with a Q3 retail-driven rebound, indicating seasonality and weaker year-round demand. Horizon Worlds has not meaningfully scaled despite multi-million-dollar creator incentives and a mobile push, leaving platform-level engagement and cross-platform ambitions unproven.

Wearables show clear commercial traction: EssilorLuxottica reported 2 million Ray-Ban Meta units and said sales more than tripled year-over-year, framing glasses as a stronger near-term revenue and demand vector. Meta still plans new headsets (an ultralight tethered device in H1 2027 and a higher-priced Quest 4 gaming unit), so the company is reallocating capital toward higher-return segments while keeping long-term headset roadmaps alive.

For investors, the shift implies potential near-term margin and revenue improvements if wearables scale, but continued VR investment and product launches create execution risk and seasonality exposure; monitoring unit sales, Horizon engagement metrics, and EssilorLuxottica sales disclosures will be critical to validate the strategic reallocation.

Key Decisions for Investors

• Consider a tactically constructive stance on META equity driven by accelerating Ray-Ban Meta sales, but size positions to account for Reality Labs execution risk and Quest seasonality
• Monitor specific KPIs before increasing exposure: quarter-over-quarter Quest unit trends, Horizon Worlds engagement/MAUs and mobile adoption, and vendor (EssilorLuxottica) disclosures on Ray-Ban Meta volumes
• Favor catalysts-based allocation: use confirmation of sustained wearables growth or positive pre-launch indicators for the ultralight H1 2027 headset/Quest 4 as buy triggers, otherwise avoid adding VR-only exposure
• Implement downside protection or reduce cyclicality exposure if upcoming quarterly reports show continued YoY Quest declines or no material traction for Horizon Worlds