Meta's Reality Labs loses $4.03 billion in Q1 2026 after 1,000 layoffs shift focus to AI wearables

Meta's Reality Labs posted a $4.028 billion operating loss on $402 million in revenue for Q1 2026, a 2% year-over-year revenue decline attributed to lower Quest headset sales partly offset by AI glasses growth. The results followed a January 2026 decision to lay off roughly 1,000 Reality Labs employees as Meta shifted VR-related resources toward AI-powered wearables and smart glasses. CFO Susan Li said VR investment would decrease significantly in 2026 while overall Reality Labs losses stayed 'on par' with 2025.