In 2021, Meta Platforms (formerly Facebook) heavily invested in the metaverse, leading to losses in its Reality Labs division. Recent layoffs point to a shift towards AI, raising questions about the company’s future direction and profitability.

Despite layoffs, Meta Platforms remains committed to the metaverse, redirecting funds to augmented reality glasses. Investors shouldn’t expect drastic changes, as the company aims to balance investments and minimize losses in the Reality Labs division.

Meta Platforms possesses profitable social media assets like Facebook and Instagram, offsetting losses in the Reality Labs division. However, abandoning the metaverse could significantly boost profitability and valuation, as shown by the stark difference in financials between the two segments.

With ongoing investment in AI and the metaverse, Meta Platforms may not be running as efficiently as it could be. Until a clear plan to exit the metaverse emerges, caution is advised for potential investors eyeing the stock in 2026.

The Motley Fool’s Stock Advisor team recommends 10 stocks for investment, excluding Meta Platforms. Past recommendations have yielded significant returns, highlighting the potential for lucrative investments with the right stock picks.

*Stock Advisor returns as of January 30, 2026. David Jagielski, CPA, has no positions in the mentioned stocks. The Motley Fool discloses its positions and recommends Meta Platforms.

Read more at Yahoo Finance: Will Cuts to the Metaverse Help Meta Platforms Stock Soar in 2026?