JAKARTA - The French-Italian eyewear group, EssilorLuxottica, is facing a major test from investors: how to accelerate the sale of AI-based smart glasses without sacrificing profitability.
The company is indeed in a favorable early position as a pioneer in the segment. Its flagship product, Ray-Ban smart glasses developed with Meta, has been a growth driver in recent quarters. However, that success has not fully convinced the market.
In a Reuters report, EssilorLuxottica's shares have fallen more than 30 percent since hitting a record high in November 2026. This decline was triggered by investor concerns about profit margins, as well as the increasing threat from new competitors in the smart glasses market.
"For this stock decline, there are two reasons. First, the entry of US competitors into the smart glasses market. Second, there is a valuation adjustment that was previously probably too high," said Fabio Caldato, portfolio manager at AcomeA SGR.
Competition pressure is expected to intensify. Google is said to be launching its smart glasses this year, while Apple is also preparing a similar product in the near future. This condition puts EssilorLuxottica in a position that must move quickly and efficiently.
One of the main challenges lies in product profitability. Ray-Ban Meta glasses are known to have a lower margin compared to the company's core business line. In fact, according to investor sources, this product is still in the stage of discussing pricing strategies and positioning with Meta.
Even so, the company insists that its partnership with Meta remains solid. On the other hand, smart glasses currently still account for a small portion of total revenue, but their contribution to growth is quite significant. In the third quarter of last year, this product contributed more than four percentage points to the group's revenue growth of 11.7 percent.
Overall, EssilorLuxottica's operating profit rose slightly to 4.46 billion euros last year. However, the adjusted operating margin is still at the 16 percent level, below the company's medium-term target of 19-20 percent in the 2022-2026 period.
Investors are now waiting for the first-quarter earnings report scheduled to be released this week. Visible Alpha consensus estimates revenue will reach 7.13 billion euros, up around 4 percent year-on-year.
Amid the pressure, EssilorLuxottica is also expanding its strategy into the medical technology sector. Products such as Nuance Audio - glasses with integrated hearing aids - are part of a business diversification to maintain long-term competitiveness.
"Switching to high-tech-based products helps companies remain competitive and protect themselves from potential pressure from cheap Chinese products," said Caldato.
Meanwhile, Bassel Choughari of Comgest sees the company's approach as still quite measured. "The guidance provided in February was quite reassuring. They expect margins to remain stable, which means the pressure from smart glasses is likely to be offset by other more profitable business lines," he said.
He also added that smart glasses have the potential to drive sales of other products with higher margins, such as photochromic lenses that automatically darken when exposed to UV light.
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