EssilorLuxottica's AI Smart Glasses Revenue Nearly Doubles On Ray-Ban, Oakley Demand

EssilorLuxottica shares rose as much as 4.5% in Paris before reversing course and falling 2%. The eyewear maker reported better-than-expected first-half profit margins, while revenue from its AI smart glasses nearly doubled in the second quarter, easing investor concerns over rising competition and component costs.

The Ray-Ban owner, which partners with Meta on smart glasses, reported a 13% increase in first-half adjusted profit to 1.9 billion euros, while its operating margin reached 18.6%, above the analyst estimate of 16.3%. Second-quarter revenue rose 8.7% at constant exchange rates to 7.69 billion euros, missing expectations due to weaker growth in North America.

Wall Street analysts called management's tone on the earnings call earlier today "optimistic" and "encouraging."

CFO Stefano Grassi noted, "There are good reasons to see a good trajectory on gross margin also for the second half." He told analysts about a pipeline of AI smart glasses set to hit the market.

EssilorLuxottica did not disclose second-quarter AI-glasses volumes, though management said growth was driven by its Ray-Ban and Oakley models developed with Meta.

EssilorLuxottica's smart glasses have emerged as early consumer-market winners by combining familiar eyewear frame designs with affordable pricing, unlike devices such as Apple's Vision Pro and other products priced above $2,000, even up to $3,000. The apparent sweet spot for mass-market adoption remains around $300 to $500 per unit.

Shares in Paris are down around 2%, after reversing gains of 4.5%. Year to date, shares have cratered, down about 39%. The reason for this is the durability of profit margins amid rising costs and intensifying competition. Analysts have also cited tensions among the heirs of founder Leonardo Del Vecchio as an additional overhang on the shares.

Here's what desks on Wall Street are saying (courtesy of Bloomberg):

Bernstein (market perform)

• The management's tone on the earnings call was "optimistic" regarding 2H, acknowledging harder comparatives, "but teasing a diversified innovation pipeline," analyst Luca Solca writes in a note
• The "positive outlook across both top line and margins reinforced on the call could bring the name back on investors' radars," even if the latest results seem "priced in"

Morgan Stanley (overweight)

• The 1H results are a "small relief following a series of downwards earnings revisions and the pressure on shares in recent months," analyst Grace Smalley writes in a note
• The management's tone on the call was "encouraging," outlining several growth drivers in 2H "while acknowledging the tougher comparison base, as well as pointing to ongoing solid cost control"

Citi (buy)

• The 2Q/1H results are mixed, "with worse sales but better margins," analyst Veronika Dubajova writes in a note
• The current valuation, which sits at the low-end of EssilorLuxottica's historical range, "already appears to discount forward sales growth"
• The better-than-expected adjusted Ebit "should diminish recent fears around margin progression/EPS momentum"

CFRA (buy)

• The results were mixed, with a slight miss on revenue and a beat on profit, analyst Wan Nurhayati says
• "We continue to see the strong adoption of AI glasses and the growth opportunity from Stellest supporting top-line momentum"
• However, Nurhayati believes the "rapid shift toward lower margin AI glasses remains a near-term margin headwind and could continue to weigh on the premium valuation the company has historically enjoyed"

Jefferies (buy)

• Analyst Julien Dormois says revenue in constant currency shows "resilient, high growth, even if slightly below cons"" * Additionally, Dormois views the first-half margin as "reassuring"
• "With the shares halving from Nov peak (margin reset, misplaced compet. fears, corp. gov.), we see a very compelling risk/reward into a quality growth compounder," the analyst writes

Bloomberg Intelligence

• "EssilorLuxottica's 1H adjusted Ebit margin rebound to 18.6%, a 233-bp beat, on price-mix and belated AI-glasses operating- leverage gains makes its 2H gross-margin expansion target feasible even without the net US tariff benefit, which added 60 bps in 1H," analyst Diana Gomes writes

Apple and Alphabet are also planning to enter the AI glasses market, with Meta currently in the lead.