Across Wall Street, analysts adopted a jovial response after Bloomberg News reported that Meta plans to make cuts to its metaverse unit. Meta’s stock climbed 5% on Thursday following Bloomberg’s report, which said that executives are considering budget cuts as high as 30% for the unit, citing people familiar with the talks. The cuts would likely hit Meta’s virtual reality group and would likely include layoffs, Bloomberg wrote. Analysts celebrated the news, saying that it suggested the company’s financial discipline remains in play and that Meta has ensured its continued focus on efficiency and growth. “The news today, in our view, suggests Meta can deliver continued product-led growth as it reallocates resources to its greatest opportunities,” wrote Citi analyst Ronald Josey, who reiterated Meta as his top stock pick. Here’s what analysts at some of Wall Street’s biggest shops had to say on the report. JPMorgan: overweight, $800 JPMorgan’s target implies about 21% upside from Meta’s Thursday close. “We are encouraged that Meta is hearing the message from the Street on expense discipline, though we still believe it is important to emphasize guardrails around GAAP EPS growth, operating income growth, and positive FCF amidst the heavy capex buildout.” Wells Fargo: overweight, $802 Wells Fargo’s forecast corresponds to upside of around 21%. “See press reports of potential 30% budget cuts at Reality Labs as clear sign that Meta leadership is taking an active approach to re-orient the cost structure to AI-related initiatives. Estimate potential savings of roughly $2 in EPS annualized.” Bank of America: buy, $810 Bank of America’s forecast calls for 22% upside going forward. “Our Take: While we assume costs will still grow materially in 2026, and at a faster rate than in 2025, we think it is constructive to think about the magnitude of flexibility that Meta may have with 2026 cost allocations. In other words, Meta likely has cost contingencies next year to help maintain EPS growth even if there are macro pressures on revenues.” Citi: buy, $850 Analyst Ronald Josey’s forecast is 28% above Meta’s Thursday closing price. “While a 10% annual expense reduction has been the norm at Meta since 2022, the potential significant cut from Metaverse investments clearly frees up resources for Super Intelligence Labs as newer AI products come to market in ’26. Since 3Q25 earnings, the debate has focused on the mix of investment across Meta’s core R & R improvements vs. Super Intelligence relative to revenue growth and the news today, in our view, suggests Meta can deliver continued product-led growth as it reallocates resources to its greatest opportunities.” Rosenblatt: buy, $1,117 The firm’s price target was approximately 69% higher than where Meta closed on Thursday. The news if true “could be meaningfully helpful for the equity … Our belief is that Reality spending, which drives we estimate $17.6B of operating losses in 2025E, is largely operating expense, not capex … So a pare back to focus on more imminent priorities could be very helpful for sentiment, and help relate the stock to a multiple more appropriate for its cash flow growth — i.e. closer to our $1,117 price target, which we believe is Street high, and which assumes an EV of 20x 2026E EBITDA.” NewStreet Research: no rating, no price target “The reported cuts are not only highly rational but help relieve growing investor anxiety ahead of the initial 2026 total expense guidance range on the late January, 4Q25 earnings call … Today’s report is reassuring investors that META is doubling down on efforts to rationalize costs and partially offset near-certain margin contraction in 2026, driven by accelerating depreciation growth and new employee compensation for Meta Superintelligence Lab (MSL) hires.”
