Meta Platforms (META) shares jumped 3.4% on Thursday despite cutting metaverse spending, thanks to strong growth from its core “Family of Apps” segment. Here’s why this shift is good news for long-term investors.
The name change to Meta Platforms in 2021 reflected the company’s expansion into virtual worlds, but it also led to a sharp decline in stock price due to heavy losses in metaverse and reality-focused projects under Reality Labs. However, Meta’s Family of Apps have been a saving grace, generating more than enough income to offset Reality Labs’ losses.
In recent years, Meta’s revenue and earnings have exploded higher, with operating margins still high at 43.3%. This is despite the company’s decision to cut back on metaverse spending in favor of artificial intelligence (AI) investments. The shift to AI aligns with Meta’s goal of connecting advertisers with relevant buyers more effectively.
With its focus on AI, Meta is investing heavily in building data centers, refining its search algorithm, and developing its Llama large language model. This massive opportunity in AI reduces the need for continued heavy investment in Reality Labs, where returns have been uncertain.
In fact, Meta’s decision to cut back on metaverse spending has made its stock even more attractive as a long-term investment. With high free cash flow, an impeccable balance sheet, and a growing dividend, Meta is poised for further growth.
Source: https://www.fool.com/investing/2025/12/08/meta-platforms-buy-ai-growth-stock-2026-metaverse