Apple Inc. has reached the late stages of development for new AirPods with built-in cameras, a significant milestone for what will likely be its first wearable device designed for the artificial intelligence era.

The project has entered a phase where prototypes feature a near-final design and capabilities, according to people with knowledge of the matter. The earbuds, which rely on cameras to see the space surrounding a user and provide information, are in advanced testing, said the people, who asked not to be identified because the work is still under wraps.