Bloomberg Tech – "Meta Stock Surges on Plans for Metaverse Cuts"

Date: December 5, 2025
Hosts: Caroline Hyde (New York), Ed Ludlow (San Francisco)
Featured Guests: Kurt Wagner (Bloomberg), Nancy Curtin (Altidman Global), Mike Shepard (Bloomberg), Peter Elstrom (Bloomberg), Daniel Dines (UiPath), Mandeep Singh (Bloomberg Intelligence), Derek Wood (TD Cowan), Seth Fiegerman (Bloomberg), Minda Smiley (eMarketer)

Episode Overview

This episode covers major tech and market developments, anchored by Bloomberg’s scoop that Meta (formerly Facebook) is considering slashing its Metaverse budget by up to 30% in 2026, signaling a strategic pivot toward AI investments. The hosts explore market reactions, Meta’s evolving vision, and broader industry repercussions. Other topics include Nvidia’s China chip struggles, domestic Chinese AI chip efforts, Snowflake and Salesforce earnings, perspectives on AI investment risks, and developing stories in tech.

Meta’s Metaverse Cuts: Details & Implications (01:37–08:00, 25:31–29:40, 42:34–47:52)

Key Reporting (01:37–04:08)

• Kurt Wagner (Bloomberg) reveals Mark Zuckerberg and Meta’s leadership are considering up to 30% budget cuts for the Metaverse division, alongside company-wide 10% cuts, during annual budget talks in Hawaii.
• A 30% reduction, not yet finalized, would entail layoffs, shifting focus away from the virtual worlds and immersive VR (Metaverse) group—once the “future of the company”—toward AR-smart glasses and AI hardware.

Memorable Quote:

"Mark Zuckerberg has touted [the Metaverse] as being the future of the company for years. So it's a pretty meaningful change."
— Kurt Wagner (03:30)

Mark Zuckerberg in 2021 (Audio Flashback):

“If we all work at it, then within the next decade the Metaverse will reach a billion people, host hundreds of billions of dollars of digital commerce, and support jobs for millions of creators and developers.”
— Mark Zuckerberg (03:46)

Meta’s New Priorities (04:08–08:00)

• Investment isn’t stopping; focus is shifting:

  • Immersive VR = De-emphasized and subject to cuts/layoffs.
  • Smart Glasses & AR = Remain a priority (notably Ray-Ban Meta partnership).
  • Meta continues to hire top hardware/design talent, with poaching from Apple highlighted.

• Strategic Rationale:

  • The market for immersive virtual worlds hasn’t materialized.
  • Meta “overspent” in anticipation of industry competition that hasn’t arrived.
  • Investments are realigning with more tangible, near-term opportunities, especially AI.

“It's not necessarily that Mark Zuckerberg no longer believes in this...but clearly they have overspent to try to build this thing.”
— Kurt Wagner (04:36)

• Stock Reaction: Meta shares surged 4%, the biggest jump since July.

Analyst Perspective: Mandeep Singh, Bloomberg Intelligence (25:31–29:40)

• CapEx & Cash Flow: Cost cuts, together with greater use of Google’s TPUs over Nvidia chips, could improve Meta’s free cash flow by $10–12 billion.
• Meta’s Strategy: AI is the “productive use case” while Metaverse remains a “moonshot.”
  • “Paring back and allocating that capital towards probably a more productive use case in AI...is the right thing to do.” (28:10)
• Hardware Focus: Pivot to AI-enabled smart glasses, less on costly VR headsets.
  • “Virtual reality would be de-emphasized over the glasses, the Ray Ban glasses as you said...” (29:18)
• Possible “year of efficiency” echoing past Meta belt-tightening.

Consumer & Analyst Reactions (42:34–47:52)

• Minda Smiley (eMarketer): The consumer appetite for the Metaverse continues to be tepid, with social media users trying to spend less time on screens, not more.
  • “I think people will wonder why ... these cuts haven't happened sooner.” (43:13)
  • AR smart glasses have momentum but remain a niche.
  • AI tools inside Meta’s main apps (e.g., WhatsApp) gain far greater traction than standalone Metaverse or AI apps.
  • Ongoing regulatory headwinds in the EU and US.

Regulatory Concerns (41:43–42:34, 46:40–47:52)

• EU investigating WhatsApp for potential unfair competition in AI, with talk of a temporary ban on Meta’s AI tools that may block rivals.

AI and Industry Capex: The Bull Market Paradox (08:00–11:19)

Nancy Curtin (Altidman Global)

• Bull Market Context: We’re in an innovation-driven bull market with heavy capex spend, debt financing, and a shifting perception of winners/losers.
  • “They tend to come with productivity improvements. But you do get some shifting perceptions and shifting priorities.” (08:30)
• Winner-Takes-All Risk: Investors wary of negative free cash flow (Meta, Oracle, OpenAI), preferring firms with financial strength (e.g., Alphabet).
• AI is the “prize”: Meta reallocating money sensibly toward AI, as market patience for loss-making “moonshots” wanes.
  • “You've got to really focus on who is delivering ... and who has the wherewithal.” (10:55)

Nvidia, AI Chips, and China: Policy and Competition (13:41–20:48)

Nvidia’s Trade Dilemma (13:41–16:53)

• Jensen Huang (Nvidia CEO) advocates that “we are mighty, we're fast, we're inventive” (13:41), and the US shouldn't cede the Chinese market.
• Export Restrictions: Tightened AI chip export rules have severely limited Nvidia’s access to China (worth up to $50B). The White House may relax H200 restrictions, but demand in China is waning.
• Gain AI Act: Nvidia is lobbying to keep more restrictive legislation at bay. Lawmakers will likely remove a "first dibs" requirement for American buyers, but concerns remain.

Rise of Domestic Chinese Chipmakers: Cameracon & SMIC (16:53–20:48)

• Peter Elstrom explains:
  • Beijing’s response has been to massively boost support for homegrown AI chipmakers (Huawei, Cameracon); production could triple in 2026.
  • Domestic chips are catching up in availability—if not quality—with significant state backing, though still far behind in yield and process (20% usable yield at 7nm vs. TSMC’s 90% at 3nm).
  • “China has decided they are going to make their own chips domestically, and they're making a lot of progress.” (18:53)
  • Beijing will “eat four times the cost” to build capacity.
    • “It's a sign of how badly Beijing wants to be able to catch up in this market.” (20:20)

Enterprise AI & Automation: The UiPath Story (20:48–25:21)

Daniel Dines (UiPath CEO) Interview (20:48–25:21)

• Earnings: UiPath shares jump on accelerating Q3 growth.
• Core Value: UiPath blends classic rule-based RPA with agent-based (“agentic”) AI for advanced automation.
  • “We believe that the key aspect of bringing reliable AI to enterprises is to have a solid foundation of automation and then AI comes on the top of it...” (21:14)
  • New opportunities in healthcare and finance via easier-to-use tools for less technical users.
• Competition with AI: Dines insists GenAI is additive, not a substitute for RPA.
  • “I have yet to see one piece of AI that was capable of replacing one of our robots...AI is just a complement.” (24:38)

Market & Earnings: Snowflake & Salesforce (29:40–34:56)

Snowflake vs. Salesforce: AI and Investor Sentiment

• Derek Wood (TD Cowan):
  • Snowflake: Stock pulled back on margin guidance, but remains up 50% YTD; committed to margin expansion and new AI-driven product lines (e.g., Snowflake Intelligence).
  • Salesforce: Underperforming; the apps group feels pressure from seat-based models and perceived threat from AI-native disruptors. Encouraging progress with AI-driven products like Agent Force.
  • “There was good acceleration on that front...starting to see some inflection in Agent Force.” (33:31)
  • Investor Caution: 2026 seen as the inflection point for AI impact in enterprise software—sales cycles and new product launches simply take longer.

Anthropic, OpenAI, and the AI Investment Race (37:58–41:43)

Dario Amodei (Anthropic CEO) at NYT DealBook

• Risk Appetite: Criticizes industry “YOLO” spending—OpenAI’s $1.4T commitment vs. Anthropic’s more “measured” $50–60B capex.
  • “Dario is claiming we’re making a measured...bet...Other firms are just going off the rails.” (38:58)
• Anthropic’s strategy: Focused on enterprise rather than mass market, aims for profitability and a possible IPO.
• Investor Dynamics: Both Amazon and Google back Anthropic (Microsoft is an OpenAI backer), but lines between backers are blurring.

Briefs: Netflix, Morgan Stanley, and EU Tech Regulation (41:43–42:34)

• Netflix: Frontrunner to acquire Warner Bros. Discovery rights, bidding covers 85% of the deal.
• Morgan Stanley: Weighing risk transfer to hedge data center exposure.
• EU vs. Meta (WhatsApp): Looking at interim measures over Meta’s AI tools and market impact—potential for temporary ban cited.

Notable Quotes & Timestamps

• Kurt Wagner (Meta Cuts):
  “Mark Zuckerberg has touted this as the future of the company for years. So it's a pretty meaningful change there.” (03:30)

• Nancy Curtin (Capital Allocation):
  “You’ve got to really focus on who is delivering...and who has the wherewithal.” (10:55)

• Ed Ludlow (Industry Reflection):
  “The year of efficiency that matter had a few years back maybe repeat...in 2026.” (29:04)

• Daniel Dines (RPA vs. AI):
  “I have yet to see one piece of AI that was capable of replacing one of our robots...AI is just a complement.” (24:38)

• Dario Amodei (Anthropic):
  “Every AI company right now is taking on a certain amount of risk...Dario is claiming we're making a measured, though still costly bet at $50–60 billion. Other firms are just going off the rails...” (38:58)

• Peter Elstrom (China Chips):
  “China has decided they are going to make their own chips domestically, and they're making a lot of progress.” (18:53)

Thematic Takeaways

• Meta’s Pivot: The strategic shift from Metaverse to AI is both a reflection of market realities and growing investor preference for near-term ROI over moonshots.
• AI Capex Boom: Tech titans are dumping tens or hundreds of billions into AI with mounting concerns about the sustainability of negative cash flows, especially with higher rates and wary markets.
• Geopolitics Shapes Tech: US-China chip tensions are reordering global AI hardware, forcing China to “buy domestic” and pay dearly to close the technology gap.
• Enterprise AI Matures: Automation and AI are increasingly entwined—with “agentic” AI (more human-like reasoning) building atop classic RPA, promising new growth for both disruptors (UiPath) and incumbents (Salesforce, Snowflake).
• Risk, Regulation, and Realism: As AI competition intensifies, both investment and regulatory scrutiny escalate—in the EU, US, and beyond. Companies position either as bold, risk-tolerant visionaries (OpenAI) or prudently opportunistic (Anthropic).

This summary captures all major discussion points and perspectives from the episode, offering a comprehensive guide for those who haven’t listened. For more, visit Bloomberg Terminal or subscribe to Bloomberg Tech.