It's AI or the highway in tech these days

"Like a helicopter too heavy for lift off, tech companies are ditching anything they don't view as essential to get their AI plans off the ground. Meta is planning to cut its metaverse division's budget by as much as 30% and considering job cuts as part of the move, writes BI's Jyoti Mann and Pranav Dixit. The decision comes as tech companies look to pare back anything not directly focused on giving them an edge in the AI wars."

"For Meta, ditching the metaverse has been a long time coming. (We actually declared it dead back in checks notes May 2023.) During Meta's most recent earnings call, the word "metaverse" wasn't even used once. It's quite the reversal from when the metaverse was the literal inspiration for the entire company's rebrand from Facebook. But it's tough to keep making the case for funding something that burns billions of dollars and doesn't directly generate a ton of revenue."

"Meta is unlikely to be the last company to cut non-AI-related fat. AI projects are really expensive. From hardware to talent to power, there doesn't appear to be a "cheap" way to do it. The space is also incredibly competitive, and even the first movers are feeling the heat. That's forcing companies to rethink their allocation of resources, particularly when it comes to projects that don't get them to their AI goals."

Meta plans to reduce its metaverse division's budget by up to 30% and is considering job cuts to prioritize AI spending. Investors reacted positively, sending Meta's stock up nearly 3.5% on the move. The metaverse effort no longer features in recent earnings commentary and has been criticized for burning billions while producing limited revenue. AI investments demand large expenditures across hardware, talent, and energy, prompting firms to shift funding away from peripheral projects. Even AI-focused organizations are narrowing priorities to concentrate on core products, while cloud incumbents benefit from increased AI-driven demand.

Read at Business Insider