Meta cuts hundreds of jobs in Reality Labs, recruiting, and sales while investing $135 billion in AI | TNW

      Meta initiated job cuts on Wednesday, impacting hundreds of positions in Reality Labs, Facebook, recruiting, sales, and global operations, according to sources familiar with the situation and LinkedIn updates from those affected. These layoffs are part of a continuous wave of workforce reductions that have intensified in 2026, as the company reallocates resources towards artificial intelligence, moving away from divisions that no longer align with Mark Zuckerberg’s strategic vision. A Meta representative confirmed the restructuring, stating that various teams across the organization regularly make adjustments to ensure they are equipped to meet their objectives, and that efforts are being made to find alternative roles for those impacted where feasible.

      The extent of the layoffs is notable. Meta employed 78,865 individuals at the end of 2025, as noted in their annual report. The layoffs on Wednesday, which sources indicate involved hundreds of employees, constitute a small percentage of the overall workforce. However, they are part of a broader trend. In January, Meta eliminated approximately 1,500 roles within its Reality Labs division, accounting for around 10 percent of that unit's workforce, and shut down three VR game studios: Twisted Pixel, Sanzaru Games, and Armature Studio. Earlier in 2025, the company also conducted performance-based terminations affecting around 3,600 employees, an action Zuckerberg described as raising performance management standards. Furthermore, in mid-March, Reuters revealed that Meta’s senior executives were asked to devise plans for workforce reductions of up to 20 percent, a potential cut of around 15,000 jobs if fully executed. Meta characterized that reporting as speculative.

      The overall trend indicates ongoing contraction. Since Zuckerberg labeled 2023 as the "year of efficiency," following a program that eliminated more than 21,000 jobs in 2022 and 2023, the company has not ceased its job cuts.

      The revisions are closely tied to Meta’s commitments to AI investments, which have escalated to levels that seemed improbable just two years ago. The company has projected capital expenditures for 2026 to range from $115 billion to $135 billion—almost double the $72 billion spent in 2025—with the majority allocated towards data centers, Nvidia GPUs, custom chips, and infrastructure supporting its Llama model ecosystem and Superintelligence Labs. Total expenses for the company in 2026 are expected to be between $162 billion and $169 billion. Barclays analysts anticipate a nearly 90 percent decrease in free cash flow as a consequence. When Meta’s stock increased by nearly 3 percent following reports of the possible 20 percent layoffs in March, the message from the market was clear: investors are demanding spending and a workforce that can sustain it.

      Additionally, Reality Labs, the division that faced the most substantial cuts in January, recorded an operating loss of $19.2 billion in 2025, accumulating losses of about $90 billion since its inception. Zuckerberg has indicated that he anticipates 2026 to be the peak year for these losses, with gradual reductions starting in 2027 as the division pivots from VR headsets to smart glasses and wearable AI devices.

      The trend extends beyond Meta. Over 45,000 tech positions have been eliminated worldwide in the first quarter of 2026, with AI being a factor in at least 20 percent of these cases. Atlassian announced 1,600 job cuts in March, positioning them as a response to the evolving AI landscape. Amazon confirmed 16,000 layoffs in late January, while Block cut 4,000 jobs, with CEO Jack Dorsey specifically highlighting AI’s increasing capability to undertake tasks traditionally performed by humans.

      The overarching pattern is clear: companies are aggressively investing in AI infrastructure while simultaneously reducing the human workforce necessary for these systems. The actual realization of productivity gains relative to the level of investment remains uncertain. Zuckerberg has claimed a 30 percent increase in output per engineer at Meta since early 2025, attributed to AI coding tools, and noted an 80 percent year-over-year increase among power users. If these metrics persist, they could signify a major structural change in operational approaches for software companies. If not, the layoffs may be perceived as mere cost-cutting disguised as strategic realignment.

      Looking ahead, the immediate concern is whether the rumored 20 percent reduction plan will be fully enacted. Meta has not provided confirmation. However, the sequence of layoffs—from performance-based terminations to the restructuring of Reality Labs, followed by this week’s cross-department layoffs—suggests the company is implementing a gradual reduction rather than a singular, dramatic layoff event.

      For those employees affected on Wednesday, this differentiation is largely academic. For Meta, the goal is for a streamlined organization that allocates $135 billion annually towards AI infrastructure to outperform the former workforce of 87,000 at its peak in 2022. The upcoming quarters will ultimately reveal whether this strategy was foresighted or hasty.