Meta’s Strategic Pivot: AI Ambitions Prompt Major Restructuring

As Meta Platforms prepares to release its quarterly earnings, the company is undergoing a profound strategic realignment. This shift involves significant workforce reductions within its Reality Labs division and a move away from its singular metaverse focus toward artificial intelligence hardware and advanced computing.

All eyes are on Wednesday, January 28, 2026, when Meta will disclose its fourth-quarter and full-year financial results after market close. Analysts anticipate quarterly revenue in the range of $56 to $59 billion, largely fueled by AI-enhanced advertising. However, investor focus will be squarely on the company's forward-looking guidance for 2026, particularly concerning its massive capital expenditure plans. The market seeks concrete evidence that the costly pivot toward AI infrastructure is yielding returns.

The dominant concern among investors remains Meta's aggressive spending on artificial intelligence. The company has already indicated that its capital expenditures for 2026 will substantially exceed the 2025 level of $70–72 billion. Market forecasts suggest that building out the "Meta Compute" data center network could drive these costs above $100 billion. This spending pressure is reflected in the stock's valuation; with a price-to-earnings ratio of 26.7, it currently trades slightly below the average of the "Magnificent Seven" tech stocks.

A Strategic Departure from the Metaverse

Confirming a major strategic correction, Meta announced this week the elimination of approximately 10% of the positions within its Reality Labs unit. This decision follows cumulative losses exceeding $70 billion from the division and signals a clear transition: from the dedicated development of virtual worlds to a new emphasis on AI-powered wearables and what the company terms "superintelligence."

Should investors sell immediately? Or is it worth buying Meta?

The restructuring is extensive. To free resources for its new priorities, Meta is closing three game development studios entirely. These include Twisted Pixel, Sanzaru Games—a studio with a two-decade history—and Armature Studio, known for its VR adaptation of "Resident Evil 4." Furthermore, no new content will be developed for the fitness application Supernatural, which Meta acquired for $400 million in 2023 following a legal dispute. A company spokesperson stated that the savings from these cuts will be directly reinvested to fuel the growth of its wearables business.

Legal Headwinds and Market Performance

Beyond internal restructuring, ongoing legal challenges continue to cloud the investment outlook. In early January, an appeals court indicated that over 2,200 lawsuits alleging addiction-related harms from Meta's platforms could proceed. The first bellwether trials in this litigation are scheduled for 2026, ensuring a persistent overhang of legal uncertainty.

Meta's shares are currently trading at $620.80, representing a decline of roughly 18% from their all-time high reached in August 2025. Analyst sentiment this week has been mixed in response to the company's evolving strategy. While some firms, including TD Cowen, modestly raised their price targets, others like Wells Fargo lowered their expectations.