EssilorLuxottica Stock Falls After Goldman Sachs Downgrade on AI Glasses Outlook

EssilorLuxottica SA (EPA:ESLX) shares fell more than 3% on Tuesday after Goldman Sachs downgraded the eyewear giant to "Neutral" from "Buy," citing an expected slowdown in the growth of its artificial intelligence-powered smart glasses business.

Analyst's Rationale

In a note to clients, Goldman Sachs analysts trimmed their 12-month price target on the Ray-Ban maker to €200 from a previous €230. The bank argued that investor expectations have become overly optimistic as the company faces tougher year-over-year comparisons and intensifying competition in the smart eyewear space.

Reflecting this view, Goldman lowered its long-term constant-currency revenue growth forecast for EssilorLuxottica to an average of 7.9% for the 2026-2028 period. This is down from its prior estimate of 8.9% and sits below the current market consensus of 9.5%.

Competitive Pressures Mounting

The report highlighted that while AI glasses have been the primary driver of EssilorLuxottica's recent growth, this momentum is expected to moderate. A key factor in the downgrade is the anticipated increase in competitive pressure over the next 18 months from upcoming smart-glasses launches by major tech players including Google, Samsung, and Apple.

Ad

Goldman also pointed to the recent launch of lower-priced Meta smart glasses. This development could reshape EssilorLuxottica's role in the value chain, potentially shifting its business more toward supplying lenses and providing distribution rather than manufacturing frames, which could weigh on reported revenue growth.

Market Reaction

In response to the downgrade, EssilorLuxottica shares dropped 3.3% to €163.75 in Tuesday trading. The decline significantly underperformed the broader European market, with the pan-European STOXX 600 index down just 0.7% during the same period.

Despite the downgrade, Goldman Sachs maintained that overall demand for AI eyewear remains healthy. The bank's revised rating reflects a moderation in growth expectations rather than a fundamental deterioration of the company's long-term market position.