Meta jumps 3% premarket, announces massive layoffs to offset soaring AI costs

Meta’s announced AI‑related capital budget of up to $135 billion for 2026 has forced the company into a sweeping workforce reduction, according to CNBC. The plan targets roughly 600 positions within the AI division, a move the firm says is intended to “offset increased AI spending” and bring the cost curve back in line with revenue growth. The layoffs represent the latest phase of Meta’s broader reorganization that has already seen speculation about cuts affecting as much as 20 % of its total headcount, a figure reported by TechCrunch.

The scale of Meta’s AI investment is underscored by its recent financial outlays. TechCrunch notes that Meta burned $19 billion on its virtual‑reality (VR) business last year, and the company expects “2026 won’t be any better” in terms of spending, implying that the AI budget will dwarf the VR expense. By earmarking $135 billion for AI hardware, talent, and infrastructure, Meta is committing roughly seven times its prior VR spend to a portfolio that includes large‑scale model training, custom silicon, and data‑center expansion.

Despite the cost concerns, the market reacted positively. CNBC reported that Meta’s shares rose nearly 3 % in pre‑market trading after the layoff announcement, suggesting investors view the cost‑cutting step as a necessary correction rather than a sign of strategic weakness. The price uptick also reflects confidence that the AI budget, while massive, will eventually translate into monetizable products across the company’s family of apps and the emerging metaverse ecosystem.

The layoffs are part of a “mass reorganization” that TechCrunch describes as ongoing, with the 600 AI roles being the most recent tranche. The company has not disclosed the exact functions being eliminated, but the focus on AI talent suggests a shift toward a leaner, more product‑focused development model. Analysts familiar with Meta’s internal budgeting have indicated that trimming staff is a common lever to manage the steep capital expenditures associated with building next‑generation AI infrastructure.

Meta’s broader financial picture remains under pressure. The $135 billion AI spend represents a significant portion of the company’s projected 2026 capital budget, raising questions about cash flow sustainability given the modest revenue growth reported in recent quarters. However, the pre‑market stock rally indicates that investors are willing to bet on Meta’s ability to leverage its AI investments into new revenue streams, even as the company navigates the immediate pain of workforce reductions.