Citi Maintains Buy on Meta Platforms (META), Sees Potential Benefits from Cost Restructuring

Meta Platforms Inc. (NASDAQ:META) is among the best stocks you’ll wish you bought sooner.

On December 4, Citi reiterated its Buy rating and maintained an $850 price target on Meta Platforms Inc. (NASDAQ:META). This reaffirmation followed a Bloomberg report that said the company is planning budget cuts of as much as 30% for its Metaverse division.

However, the analysts at the investment bank view this potential restructuring as a strategic realignment rather than a negative development like a retrenchment. They noted that it would free up capital and talent to accelerate Meta’s Super Intelligence Labs and next-generation AI initiatives as new products approach launch in FY2026.

Meta’s allocation of resources between core Reality & Research (R&R) efforts and emerging artificial intelligence opportunities has been a hotly debated topic recently. Citi, however, believes that the move is a confirmation that Meta is sharpening its investment focus toward higher-return avenues to drive incremental growth.

According to the Bloomberg report, most of the reductions will be in Meta’s virtual reality group and Horizon Worlds. Meta Platforms Inc. (NASDAQ:META) is expected to divert the savings toward futuristic projects such as AI glasses and other wearables. Elaborating on that, the company spokesperson said in a statement:

“Within our overall Reality Labs portfolio, we are shifting some of our investment from Metaverse toward AI glasses and wearables, given the momentum there. We aren’t planning any broader changes than that.”

While layoffs will most likely be part of the reductions, a final decision on the cuts is yet to be made, according to people familiar with the developments, the Bloomberg report said.

Meta Platforms Inc. (NASDAQ:META) operates major social media services, including Facebook, Instagram, WhatsApp, Messenger, and Threads, as well as virtual reality products such as Oculus headsets.

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Disclosure: None. This article is originally published at Insider Monkey.