Meta’s stock jumped roughly 8% at the open as investors cheered the company’s plans to trim capital expenditure, a signal that Mark Zuckerberg is finally willing to tighten the purse strings on the parts of his empire that have been hemorrhaging cash.

The metaverse gets a haircut

At the center of the capex reduction is Reality Labs, Meta’s metaverse division. The unit has been proposed for budget cuts of up to 30%, a figure that would have sounded dramatic a couple of years ago but now reads more like overdue maintenance.

Reality Labs generated approximately $2.1B in revenue against $17.7B in operational losses. For every dollar the division brought in, it burned through roughly eight more.

The proposed cuts were first floated in December 2025, and even the initial discussion was enough to lift Meta’s stock by 4-6%.

AI is eating the metaverse’s lunch money

Meta’s 2026 capex guidance tells the story of a company still willing to spend big, just on different things. The initial guidance was set at $115B to $135B. After Q4 2025 earnings, that range was revised upward. By late April 2026, the company had lifted its capex outlook to $125B to $145B.

That last revision spooked investors. Shares dropped 5-10% in after-hours trading when the higher range was announced.

The January 2026 guidance, which paired higher AI capex with robust revenue expectations, drove the more-than-8% share price increase that set the tone for how investors now react to these announcements.

CEO Mark Zuckerberg has been explicit about the trade-off, linking personnel cuts directly to funding for AI compute infrastructure. To that end, Meta announced a workforce reduction of approximately 10%, roughly 8,000 jobs.

What this means for investors

For shareholders, the math is straightforward in theory. Cutting $17.7B in annual losses from Reality Labs, even partially, while investing in AI tools that can enhance Meta’s advertising business and user engagement, should improve margins over time.

A capex range of $125B to $145B is an enormous commitment. If AI infrastructure investments don’t translate into proportional revenue growth, Meta will have simply traded one expensive bet for another. The April 2026 stock dip after the capex revision was a reminder that investors are watching the spending-to-returns ratio closely.