Reality Labs Restructuring Seen as "Step in Right Direction" for META, Analyst Says

Meta Platforms, Inc. (NASDAQ:META) is one of the AI Stocks on the Market’s Radar. On December 5, Mizuho maintained its “Outperform” rating on the stock with an $815.00 price target.

The rating affirmation follows Meta’s announced restructuring in its Facebook Reality Labs (FRL) segment, an early sign of fiscal restraint which reduces risk sentiment into next earnings.

According to several sources, Meta is reportedly planning to cut its budget by up to 30% in its Reality Labs metaverse division. Job cuts are also going to be a part of the move, leaving employees uncertain.

The firm acknowledged how these cuts have led to mixed feedback from investors. While bears are pushing back with the argument that this isn’t a cut across all of FRL but only a portion of the segment.

They also noted Meta’s recent messaging about continued investments and cited a New York Times article which pointed that the company is shifting spending rather than reducing it outright.

Some investors believe that it will take some time for the management to “rebuild” credibility and trust “after preaching discipline this summer/fall before the big cost guide in 3Q.”

While these concerns exist, the firm believes that narrowing focus at FRL is “an important signal that spending is not unchecked, and a step in right direction.”

On the other hand, bulls now see moderated risk around Meta’s formal 2026 cost guidance heading into the next earnings report.

Meta Platforms has been expanding its advertising capabilities and also invests heavily in artificial intelligence and the metaverse.

While we acknowledge the potential of META as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 10 AI Stocks Making Headlines on Wall Street and 12 Must-Watch AI Stocks on Wall Street. 

Disclosure: None.