Major tech companies are reportedly scaling back their metaverse investments, shifting focus to AI development amid declining interest in virtual worlds. Meta (formerly Facebook), Microsoft, and other industry giants have quietly reduced funding for metaverse projects over the past year, according to internal sources. The trend follows Meta's $36 billion metaverse division losses and Microsoft's recent layoffs in its mixed reality team. Analysts attribute the pivot to slowing user adoption of VR devices and the explosive growth of generative AI technologies. While some firms maintain limited metaverse initiatives, most are now prioritizing AI research and product development.