Meta Platforms is preparing to re-enter the smartwatch arena, reviving a previously shelved project as the artificial intelligence hardware race accelerates. According to reports, the Instagram parent plans to debut its first smartwatch in 2026, signaling renewed confidence in consumer AI devices after earlier cost-cutting measures within its Reality Labs division. For investors, the move reflects both strategic recalibration and growing conviction that AI-enabled wearables could become a meaningful ecosystem extension.

Smartwatch Strategy Reignited

Meta’s revived “Malibu 2” smartwatch is expected to feature health tracking capabilities alongside a built-in Meta AI assistant. The initiative marks a reversal from 2022, when the company scaled back hardware experimentation amid broader spending discipline and investor pressure to rein in Reality Labs losses.

Unlike earlier iterations reportedly equipped with multiple cameras, the upcoming model appears more focused on practical consumer use cases, particularly health and contextual AI support. Embedding a proprietary assistant directly into a wearable device aligns with Meta’s broader ambition to integrate generative AI across platforms, potentially enhancing user engagement and data feedback loops.

From a capital allocation perspective, the smartwatch reboot suggests Meta believes its balance sheet and advertising-driven cash flows can once again support measured hardware expansion. After aggressive cost controls in 2023 and 2024, investors have rewarded the company with improved multiples, creating space for selective long-term bets.

AI Wearables: From Experiment to Scalable Category

Meta’s smartwatch return coincides with a broader AI-driven resurgence in wearables. Smartglasses have emerged as an early breakout segment, particularly through Meta’s partnership with EssilorLuxottica, the parent of Ray-Ban. Shipments of AI-enabled glasses reportedly climbed to nearly 6 million units last year, underscoring tangible consumer traction.

The company is developing several augmented reality and mixed-reality devices, though management appears cautious about market saturation. Reports indicate delays for certain MR products until 2027, reflecting concerns about launching too many devices too quickly and confusing consumers. This disciplined pacing may signal lessons learned from prior Reality Labs missteps, where ambitious timelines and heavy investment outpaced demand.

For U.S. and Israeli investors tracking technology hardware cycles, the AI wearable shift represents a structural pivot rather than a speculative fad. AI-powered devices are increasingly framed as companions to smartphones rather than replacements, broadening monetization pathways through advertising, subscriptions, and data services.

Balancing Innovation and Investor Expectations

Meta’s renewed smartwatch push arrives amid strong U.S. demand for its existing smartglasses, even prompting a temporary pause in international expansion due to supply constraints. This suggests that, unlike earlier hardware attempts, Meta may now be responding to proven consumer appetite rather than speculative projections.

Still, execution risk remains. Hardware margins are traditionally thinner than digital advertising, and product differentiation in a competitive smartwatch market will be critical. Apple, Samsung, and other incumbents dominate health-focused wearables, meaning Meta must leverage its AI integration and social ecosystem to stand out.

Looking ahead, the success of Malibu 2 will depend on whether consumers perceive AI-enhanced wearables as indispensable tools or niche accessories. If Meta can align health tracking, contextual AI, and seamless social integration, the smartwatch could reinforce its ecosystem moat. Conversely, if adoption lags, investors may question the capital intensity of hardware diversification once again.