A single pair of Meta AI glasses and a pendant-style AI device lifted the entire communication services sector. Why haven't Apple and Google responded meaningfully yet, and how is this different from the AI wearables that all failed before?

Why a single device moved an entire sector

At Connect 2026 on September 23, Meta unveiled Muse Charm, a palm-sized AI companion device. It is a pendant- or keyring-style device with a fingerprint sensor that lets users talk to the AI and recognize objects without taking out their phone, and it will launch in the year-end shopping season (Irish Times, 2026-09-24). At the same event, Meta also introduced third-generation Ray-Ban Meta glasses (a six-microphone array that removes 90% of ambient noise, from $449) and a lightweight 100g VR headset (Ubergizmo, 2026-09-23). That is the backdrop for XLC being the only major sector ETF to post clear strength today (+1.27%).

The evidence that the market took this as a structural signal rather than "just another product" is the speed of analyst price target revisions. Within September alone, JPMorgan upgraded the stock from Neutral to Overweight and raised its price target from $640 to $820, Wells Fargo raised its target from $640 to $796, and Citigroup maintained $915, calling the "integration of the Neural Band and heads-up display impressive" (TipRanks, 2026-09-21). Meta shares jumped more than 11% on September 21 alone.

What are Apple and Google doing — an asymmetry of winners and losers

Google has committed to launching a smart glasses lineup this year and has already signed a $150 million collaboration deal with Warby Parker. Apple is only reported to be launching smart glasses "within one to two years," with no concrete product unveiled yet (techcrunch, compiled from related reports). In other words, Meta currently holds a one- to two-year lead in the form-factor race, which is also why XLC is rallying alone — Apple (in XLK) and Google (in XLC, but with any hardware impact diluted by its large search and cloud exposure) have no competing products yet that could be priced into their shares.

Past AI wearables all failed, so why is this time different?

The Humane AI Pin, launched in 2024 after raising $230 million, shut down in February 2025 due to performance problems, and most of its assets were acquired by HP for $116 million. Rabbit R1 announced initial sales of 100,000 units, but its actual daily active users were only about 20,000. In 2025, 85% of AI hardware startups failed (compiled from TechCrunch and digitalapplied). The common cause was that they tried to push a new device to replace the smartphone "when the phone already in your pocket handles AI."

Muse Charm differs structurally in two ways. First, it is designed around "ambient intelligence" that complements rather than replaces the phone — it handles only conversation and recognition, while the phone and apps still do the rest. Second, it rides on the distribution network of Meta's app ecosystem, which 70-80% of the U.S. population already uses. Humane and Rabbit demanded entirely new habits without such distribution, so their odds of failure were structurally higher.

"Meta has a true right to win in AI... from June to now Meta stock is up like 30%." — Rich Greenfield, LightShed Partners

So what should investors do

The current rally reflects announcement momentum, not sales results. The checkpoint is actual sales and active-user data from the year-end shopping season; if announced figures and actual usage diverge as they did with Rabbit R1, the rally could reverse. Conversely, until Google and Apple release official competing products, Meta will effectively have the AI wearable category to itself for one to two years, so it is reasonable to maintain XLC and META weightings while using holiday-season sales indicators and the timing of Apple's official smart glasses announcement as the next checkpoints.