VR is revolutionizing more than gaming and entertainment.
The global virtual reality market is expected to expand at a compound annual growth rate, or CAGR, of 15% from 2022 to 2030, according to Grand View Research. With a total market value of $21.8 billion in 2021, overall revenue in the sector is forecast to reach $87 billion by 2030. Beyond gaming and entertainment, the technology’s applications “in instructional training, such as for teaching engineers, mechanics, pilots, field workers, defense warriors, and technicians in the manufacturing and oil and gas sectors, is propelling the market growth,” according to Grand View Research’s latest analysis. VR is even being used by event planners. For investors who want to get in on a budding new industry, these seven companies are some of the best VR stocks to watch right now.
Meta Platforms Inc. (ticker: META)
Any discussion of VR should start with Meta Platforms, formerly known as Facebook. Since 2019, the company has invested more than $36 billion in the metaverse, of which VR is the main component. It bought Oculus in 2014 and the company’s Quest 2 headset was the best-selling VR headset of 2021, shipping more than 8.7 million units. “The head-mounted display device segment accounted for the largest revenue share of over 60% in 2021 and is expected to dominate the market from 2022 to 2030,” according to Grand View Research. As the leader in VR platforms, Meta has already built a sizable lead in both bringing VR to the masses and monetizing it. Of course, this doesn’t discount the many regulatory headwinds that Meta, along with the rest of Big Tech, are facing. Not to mention its declining Facebook user base, which could hurt the advertising revenue Meta needs to reinvest into VR.
Apple Inc. (AAPL)
The world knows Apple is working on a VR headset, a highly anticipated product from a global technology leader. In May 2020, it acquired NextVR Inc., a VR company focused on live sports and entertainment events, however, nobody knows quite what this headset will be. The release may come in 2023, and there’s speculation that the headset could run as much as $3,000 per unit. That would make it considerably more expensive than Meta’s Quest 2 headset, which costs consumers $299 to $499 per unit. The answer to how Apple believes it can compete at this price point remains to be seen. However, Apple has continuously charged more for its MacBooks and iPhones than its competitors charge for comparable products, and it appears to be banking on the same brand recognition and customer loyalty for its VR headsets.
Microsoft Corp. (MSFT)
Microsoft made a name for itself back in the 1990s with its Windows operating system. But more recently, with its $68.7 billion bid to purchase Activision Blizzard Inc. (ATVI), the company has revealed its intention to compete in the metaverse, and hence the world of VR. Activision isn’t yet considered a major player in the metaverse, but it is a gaming company already making inroads into the VR market and Microsoft has framed the pending acquisition as a metaverse play. While the fate of the Activision deal is uncertain after the Federal Trade Commission issued a complaint seeking to block the acquisition in December, Microsoft has also dipped its toes into the VR world with the HoloLens 2 augmented reality headset. Grand View Research cites Microsoft’s Xbox Series X and Series S as “likely to provide VR firms with new opportunities to strengthen their position in the consumer VR arena.” If allowed to proceed, the Activision acquisition could help push that technology even further ahead of competitors.
Nvidia Corp. (NVDA)
Nvidia’s graphics processing units, or GPUs, deliver the kind of high-quality graphics that could make VR extremely compelling. That’s because the GPUs that Nvidia creates could be precisely what will drive VR’s reality-based graphics simulations. The company’s GPUs currently account for around 80% of market share. This is considerably more than competitor Advanced Micro Devices Inc. (AMD), which holds a mere 20% of market share. NVDA stock is up 254% during the past five years as of Dec. 15, and that’s with a roughly 42% loss in 2022. Of course, there are many other reasons to own NVDA, including its involvement in cutting-edge industries such as artificial intelligence and autonomous vehicles. Investors can simply add VR to NVDA’s already compelling investment case.
Qualcomm Inc. (QCOM)
Nvidia may dominate the market share of GPUs within computers, but Qualcomm has placed its focus elsewhere: smartphones. Qualcomm’s Snapdragon platform is used in Android and Windows smartphones, laptops, tablets and smartwatches. It’s even used in Meta’s Oculus Quest 2. If you think the future of VR is more mobile than PC, QCOM may be the stock pick for you and now may be the time to buy given shares are down 36.2% year to date through Dec. 15. According to MarketWatch, of the 31 analysts covering the stock, 22 rate QCOM a “buy” or “overweight,” eight give it a “hold” and only one rates it a “sell.”
Sony Group Corp. (SONY)
Sony’s PlayStation 5, alongside Microsoft’s Xbox, is another video game console Grand View Research considers likely to help VR firms strengthen their position in the market. The PS VR headset gives users a 360-degree view and 3D audio to help pinpoint where sounds are coming from and how far away they are. Overall sales were up 16% in 2022 as of November, with operating income up 8%. Like most tech stocks, SONY is down big in 2022, off 37.8% this year as of Dec. 15, but it’s still up more than 75% over the past five years.
Unity Software Inc. (U)
Unity Software is creating VR games that let players compete in real time. The company is building the metaverse’s architecture with the help of professional designers. This includes many already successful titles, including augmented reality game Pokemon Go. This strategy is paying off well for Unity. The company saw year-over-year revenue growth of 44% in 2021, and in the third quarter of this year reported record quarterly revenue, up 13% compared with the third quarter of 2021. Unity made its initial public offering, or IPO, in September 2020. The stock has lost 56.6% since then, as of Dec. 15. That said, its future looks bright: Revenue is expected to grow by 61% in 2023.
7 best virtual reality stocks to watch now:
— Meta Platforms Inc. (META)
— Apple Inc. (AAPL)
— Microsoft Corp. (MSFT)
— Nvidia Corp. (NVDA)
— Qualcomm Inc. (QCOM)
— Sony Group Corp. (SONY)
— Unity Software Inc. (U)
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7 Best Virtual Reality Stocks to Watch Now originally appeared on usnews.com
Update 12/16/22: This story was previously published at an earlier date and has been updated with new information.
