Meta Has Surged on the Back of AI Software. Why Hardware Is the Next Play.

Sales of Ray-Ban Meta smart glasses have reached more than two million pairs. (Photo by JOSH EDELSON/AFP via Getty Images)

Meta Platforms investors might have forgotten about the Metaverse amid the excitement about artificial intelligence.

But CEO Mark Zuckerberg still believes in the potential of virtual-reality hardware, based on the company’s latest reported investment.

Meta has acquired a stake of just under 3% in eyewear manufacturer EssilorLuxottica, its smart glasses partner and owner of the Ray-Ban brand, for around $3.5 billion, according to multiple reports on Wednesday.

Meta and EssilorLuxottica didn’t immediately respond to requests for comment. EssilorLuxottica shares were up 6% in local trading in Paris on Wednesday, putting the company’s market valuation at €110.6 billion, or $129.5 billion**.** Meta shares were up 1.2% in early trading.

Pouring billions more dollars into smart glasses might be expected to make Meta shareholders nervous, considering the costs racked up by its Reality Labs division that oversees the hardware. Reality Labs could book a loss of up to $20 billion this year, according to analysts at credit-research firm Gimme Credit, up from $17.7 billion in 2024. That’s on top of the hundreds of millions Meta is spending to build up its new “Superintelligence Labs” unit for AI software.

However, smart glasses have been a relative success for Meta compared with bulkier virtual-reality headsets. More than two million pairs of Ray-Ban Meta smart glasses have been sold since their launch in 2023, according to EssilorLuxottica, and the two companies said last month they were planning a new range of Oakley-branded eyewear.

Notably, Meta and EssilorLuxottica now brand their joint products as “AI glasses.” With Meta stock hitting record highs recently on the back of enthusiasm about AI, that’s probably smart branding. But it doesn’t mean Meta boss Zuckerberg has given up on his dream of a Metaverse where virtual- or augmented-reality devices displace the smartphone and free his company from dependence on the likes of Apple.

“The two major parts of our vision—AI and the metaverse—are connected. By the end of the decade, I think lots of people will talk to AIs frequently throughout the day using smart glasses like what we’re building with Ray Ban Meta,” Zuckerberg said last year.

Smart glasses are still a relatively niche product. Global sales of all brands surpassed two million units for the first time in 2024, according to Counterpoint Research—that compares with more than 1.2 billion smartphones. However, smart glasses sales more than tripled last year and are expected to grow more than 60% each year through 2029 by Counterpoint’s estimates, while the smartphone market is stagnating.

“This is how the Metaverse could get started and eventually replace the smartphone, but it is going to take a long time,” wrote Richard Windsor, an independent technology analyst, in a research note on Wednesday. “From inception to global domination, the smartphone took 15 years to replace ordinary mobile phones, and I suspect that the Metaverse could be similar or even longer.”

Meta had more than 60% of the smart glasses market in 2024, but it has competition. Alphabet Google said earlier this year it was working with fashion house Kering and eyewear company Warby Parker to develop its own AI-powered glasses. Warby Parker shares were flat on Wednesday, after rising 4.5% on Tuesday.

Write to Adam Clark at adam.clark@barrons.com