Meta cuts to metaverse ‘black hole’ could free up billions for AI and lift shares by 20%: analysts
The Block
Analysts suggest Meta's planned deep cuts to its metaverse division could free up billions for AI and boost stock value by 20%.Summary
Mizuho analysts described Meta's Reality Labs, the metaverse division, as an "$80 billion black hole" of cumulative losses and project that cuts of up to 30% could significantly strengthen Meta's earnings profile, potentially adding $2 per share to 2026 earnings. This strategic pivot, which investors view as overdue, could free up resources for Meta's AI efforts, leading Mizuho to reiterate an Outperform rating with an $815 price target, implying over 21% upside. These potential reductions, which could include layoffs, come as the broader metaverse sector has collapsed, with associated tokens losing nearly all their value since early 2025 peaks.
(Source：The Block)