Remember when everyone thought the metaverse was going to be the next internet? Yeah, me too. Billions poured in, headsets flew off shelves (sort of), and the vision was nothing short of revolutionary. Fast forward to late 2025, and something fascinating just happened that sent Meta’s stock soaring almost 5% in a single session.
Reports dropped that the company is seriously considering slashing the budget of its metaverse division – we’re talking cuts as deep as 30%. And instead of panic, Wall Street threw a party. Why? Because sometimes the best move a tech giant can make is admitting when it’s time to stop throwing cash at a black hole and redirect it to where the real growth is exploding right now.
The Pivot Everyone Secretly Wanted
Let’s be honest – the metaverse dream has been bleeding money for years. The division responsible for virtual reality and horizon worlds has become legendary on Wall Street, just not in a good way. We’re talking operating losses that make even the boldest growth investors wince. But yesterday’s news feels different. It feels like the grown-up decision the market has been quietly begging Mark Zuckerberg to make for the last two years.
The stock didn’t just tick up. It surged. And within hours, a chorus of analysts from the biggest banks on the planet started pounding the table harder than ever. Price targets got upgraded left and right, and the phrase “financial discipline” started trending in finance circles like it was 2023 all over again.
What the Cuts Actually Mean
Here’s the part that actually matters: these aren’t random layoffs to look busy. This is a strategic reallocation. The money that was flowing into building digital worlds most people still don’t care about is reportedly being eyed for something far more immediate and, frankly, profitable – artificial intelligence.
Think about that for a second. While one of the most ambitious moonshots in tech history might be getting sized down to something more realistic, the company is freeing up billions – yes, billions – to double down on the one area where it’s already crushing the competition. And the market rewarded that clarity instantly.
“The potential significant cut from metaverse investments clearly frees up resources for newer AI products. This suggests Meta can deliver continued product-led growth as it reallocates resources to its greatest opportunities.”
A leading Wall Street analyst, December 2025
Wall Street’s New Price Targets Are Eye-Popping
The analyst love-fest that followed was something to behold. In less than 24 hours, fresh notes flooded trading desks with targets that would have seemed ridiculous just a few months ago. Here’s a taste of what the smartest money on the Street is now saying:
- One major investment bank raised their target to $800 – implying over 20% upside from current levels
- Another shop stuck a 28% gain on the table with an $850 target, calling Meta their top pick for 2026
- A boutique research firm went completely rogue with a $1,117 target – yes, you read that right – suggesting the stock could nearly double
Even the more conservative voices sounded relieved. The general vibe? “Finally.” Finally, the company appears to be listening to shareholders who’ve watched tens of billions vanish into virtual reality with precious little to show for it on the bottom line.
The Math Behind the Excitement
Let’s talk numbers, because this is where it gets really interesting. Some analysts estimate that trimming the metaverse unit aggressively could add roughly $2 per share to annual earnings power. That might not sound massive on its own, but when you’re a company trading at these valuations, every dollar of reclaimed profit is pure rocket fuel.
More importantly, this move signals something bigger: the efficiency era isn’t over. After the brutal but necessary layoffs of 2023 and 2024, many investors worried the old spending habits would creep back in. The metaverse cuts prove the opposite – management still has religion when it comes to capital discipline.
| Analyst Firm | Rating | Price Target | Implied Upside |
| Major Global Bank | Overweight | $800 | ~21% |
| Top-Ranked Shop | Buy | $850 | ~28% |
| Boutique Research | Buy | $1,117 | ~69% |
| Bulge Bracket Firm | Overweight | $802 | ~21% |
Why This Feels Like a Turning Point
I’ve been watching this stock for years, and something about this moment feels different from the usual rumor-driven pops. This isn’t about a new feature launch or another acquisition. It’s about maturity. It’s about a company that spent years chasing the horizon finally deciding that delivering value to shareholders today matters just as much as building the future.
And honestly? That’s refreshing. In a world where tech CEOs often seem more interested in sci-fi presentations than profit margins, seeing one of the biggest players choose financial responsibility over ego is legitimately exciting.
The metaverse isn’t dead – far from it. But scaling back the money-losing parts while accelerating investment in AI that’s already generating real engagement and revenue? That’s the kind of pragmatic leadership markets reward generously.
What Happens Next
The real test comes in late January when the company reports fourth-quarter results and, more importantly, gives 2026 expense guidance. Investors will be watching like hawks to see if these rumored cuts materialize and how aggressively management plans to reallocate resources.
If the company delivers a guidance range that shows meaningful operating leverage returning even as AI spending ramps up, we could be looking at one of the most powerful re-rating events in tech since the post-layoff rally of 2023-2024.
Conversely, if this turns out to be just talk with no follow-through, the disappointment could be sharp. But right now, the momentum is clearly with the bulls.
“Today’s report is reassuring investors that the company is doubling down on efforts to rationalize costs and partially offset near-certain margin contraction in 2026.”
Independent research firm note, December 2025
In my view – and clearly in the view of most of Wall Street right now – the risk/reward here looks exceptionally compelling. A company with dominant market positions, improving capital allocation, and exposure to the single hottest trend in technology (AI) trading at reasonable multiples?
That’s the kind of setup growth investors dream about.
The metaverse chapter isn’t closed. But for now, the market has decisively voted that redirecting capital from money-losing bets to proven winners is exactly what needed to happen. And when Wall Street speaks that clearly with both upgrades and price action, smart investors listen.
Sometimes the best trade isn’t finding the next big thing. Sometimes it’s recognizing when a great company finally stops doing the dumb thing. And right now, that’s exactly what appears to be happening.
