Systems Architecture & Strategic Forecasting in XR and Edge AI (2025–2026): The Great Decoupling

The operational landscape for Extended Reality(XR) and Artificial Intelligence (AI) approaching the2025–2026 horizon is defined by a rigorous archi-tectural decoupling from cloud dependency. This shift is driven not only by the immutable physics of latency but by a looming macroeconomic crisis: a projected $600 billion gap between AI infrastruc-ture CapEx and realized revenue. Consequently, the“Metaverse” as a marketing construct has collapsed,replaced by utilitarian “Spatial Computing” driven by On-Device Intelligence. This report examines the shift toward Small Language Models (SLMs) and the disruptive emergence of Neuromorphic Comput-ing—bio-inspired architectures that fundamentally alter the unit economics of intelligence. By con-trasting “Broken Patterns” with “Quiet Successes,”it outlines a strategic roadmap for navigating the transition from the “Silicon Cathedral” of the cloud to the distributed efficiency of the edge.