Wedbush analysts said recent changes at Meta Platforms Inc (NASDAQ:META, XETRA:FB2A, SIX:FB) reflect a more disciplined and intentional investment approach, even as the company continues to spend heavily on artificial intelligence and hardware initiatives.
The assessment follows a series of reports pointing to job cuts and a reallocation of resources within Meta’s Reality Labs unit as the company refocuses on consumer hardware and wearables.
Bloomberg reported that Meta plans to cut about 10% of roles in Reality Labs, which employs roughly 15,000 people. The announcement followed earlier reports from December suggesting the company could reduce up to 30% of its metaverse initiatives this year.
Meta plans to reinvest some of the savings “to support the growth of the company’s new wearable device efforts and to operate the Reality Labs business more sustainably,” Wedbush's analysts noted.
“While we acknowledge investor concern around management’s intent to invest more deeply this year, we believe the company is taking a more intentional approach, and this cycle is more disciplined than Meta’s investment thesis four years ago,” the analysts wrote.
They added that they are “encouraged by management’s cost-cutting efforts thus far” and said they are confident in leadership’s ability to manage the current transition.
The analysts also cited reporting that Meta may be aiming to double production of its AI-powered smart glasses by the end of 2026, potentially increasing annual capacity to more than 20 million units.
Wedbush said it views these developments positively relative to current expectations, which call for “a sharp compression in GAAP operating margin of approximately 500 basis points to 36.4% this year, from 41.3% in 2025.”
The firm reiterated its ‘Outperform’ rating on Meta and said the company remains its “top advertising pick into 2026.”
The analysts pointed to resilient digital advertising trends, continued adoption of Meta’s Advantage+ product suite, and ongoing monetization of newer channels.
While investor caution around elevated investment levels has increased, Wedbush wrote that “the higher level of investment is justified,” adding that AI capabilities across Meta’s advertising stack and content recommendation engines are already driving “tangible benefits for Meta’s Family of Apps and Reality Labs.”
Shares of Meta traded down 2% at about $628 on Tuesday afternoon.