Meta closed out Q4 2025 with record revenue, culminating a highly successful financial year. The company's total revenue for the year reached $200.97 billion, a 24% year-over-year increase. Despite this financial performance, questions arise regarding Meta's 2026 spending plans, particularly within its Reality Labs division, which saw cuts recently.

Fueled by strong sales of the Meta Quest 3S and AI glasses, Reality Labs generated nearly $1 billion in Q4 2025. CEO Mark Zuckerberg highlighted the company's focus on AI and wearables, with plans to double or triple smart glasses production. This strategic shift follows layoffs within Reality Labs, including its game development studios, signaling a change in direction.

Despite restructuring, Meta projects Reality Labs' losses will remain at 2025 levels in 2026. The company plans to spend between $162 and $169 billion on infrastructure and development, primarily on AI initiatives. This significant investment raises questions about the allocation of resources and the long-term strategy for the metaverse and virtual reality.

Meta's continued investment in AI suggests a significant pivot from its earlier focus on the metaverse. While the company continues to invest in the future of VR and AR, it is clear that AI will be a core focus for the company moving forward. The company's strategy seems to be shifting, focusing on making Horizon a success on mobile.