The global virtual reality market is expected to expand at a compound annual growth rate, or CAGR, of 27.5% from 2023 to 2030, according to a report from Grand View Research. With a total market value of $59.9 billion in 2022 — more than double its value in 2021 — overall revenue in the sector is forecast to reach over $435 billion by 2030.
[Sign up for stock news with our Invested newsletter.]
For investors who want to get in on a budding industry, these five companies are some of the best VR stocks to watch right now:
| Stocks | Year-to-date gain* |
| Nvidia Corp. (ticker: NVDA) | 219.2% |
| Meta Platforms Inc. (META) | 170.3% |
| Apple Inc. (AAPL) | 49.5% |
| Snap Inc. (SNAP) | 76.0% |
| Microsoft Corp. (MSFT) | 56.2% |
*As of Dec. 11 close.
Nvidia Corp. (NVDA)
“Philosophically, whether we are talking about AI or virtual reality, we believe that the best play when it comes to these developing and nascent technologies is to adopt the ‘pick and shovels’ approach,” says Daniel Milan, investment advisor representative and managing partner at Cornerstone Financial Services in Southfield, Michigan. “What we mean by that is the most opportunistic approach is to not invest in the gold miners themselves but instead in the companies that sell the picks, shovels and tents necessary to mine or find the gold.”
The gold in question here is semiconductors and chips, and as a leading designer of graphics processing units, or GPUs, for gaming consoles and PCs, Nvidia is one heck of a pick and shovel company.
“Nvidia has specific virtual reality GPUs that are best in the business and even software developer kits to deliver the best performance (and) images,” Milan says. “No one delivers a higher quality ‘pick and shovel’ than Nvidia and thus they are poised to significantly benefit from this technology transition.”
Meta Platforms Inc. (META)
Any discussion of VR must include Meta Platforms, formerly known as Facebook. In the company’s third quarter 2023 earnings presentation, CEO Mark Zuckerberg announced the company’s first smart glasses with virtual assistant Meta AI built in and an AI Studio platform that lets users create and interact with different AIs.
“There continues to be a ton of innovation in AI,” Zuckerberg said in the presentation. He added that the company used its annual Connect conference “to describe and start launching a lot of the new consumer AI experiences that we expect to become meaningful parts of all of our apps and our business over the coming years.”
As a 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. Also worth mentioning is Facebook’s declining user base, which could hurt the advertising revenue Meta needs to reinvest into VR.
[READ: Ethereum ETF: How BlackRock’s Proposal Affects Crypto’s Outlook]
Apple Inc. (AAPL)
No list of the best virtual reality stocks would be complete without Apple seeing as the company is the top holding in the Morningstar Global Metaverse & Virtual Interaction Select index, which is designed to provide pure exposure to the metaverse and virtual interaction theme.
In early June, Apple unveiled the Vision Pro, an augmented reality headset and Apple’s first new product category since the Apple Watch was released nine years ago. The headset, which looks like a pair of ski goggles, is being called a “spatial computer” in that it allows users to overlay virtual images, videos and applications over surfaces in the real world. Eye and hand tracking allow the wearer to interact with what they see — for instance, pinching the air can zoom in or out of a photo.
One of the biggest question marks around the launch of the Vision Pro is the price tag: $3,499. That price point will make it hard to compete with Meta’s Quest 3 headset, which starts at $500 per unit.
Apple believes it can compete at this price point by using “much higher-quality components while prioritizing user privacy,” according to Apple Insider. If the market agrees, only time will tell.
Snap Inc. (SNAP)
One of the most popular social media platforms doesn’t get as much attention in the virtual reality discussion as it deserves. To say the maker of Snapchat is investing in artificial intelligence and virtual reality is an understatement.
In 2019, Snap bought AI Factory, a video and image recognition, processing and analysis company, to help users create animated selfie videos. Shortly thereafter, it acquired artificial intelligence-based voice technology provider Voca.ai, augmented reality display provider WaveOptics and Fit Analytics, which uses machine learning to help people determine the right size of apparel to purchase online.
Ali Mogharabi, a senior equity analyst for Morningstar who covers Snap, says the company’s innovative features and data privacy could help it steal ad share from Facebook, which has had safety concerns.
Morningstar expects 11% year-over-year growth for Snap in 2024. “While costs related to hosting are generally fixed in nature, we expect the firm to invest in the cloud more aggressively due to its attempt to enhance AI capabilities for users and advertisers,” Mogharabi writes.
Microsoft Corp. (MSFT)
Microsoft made a name for itself back in the 1990s with its Windows operating system. But it’s the company’s more recent investments in OpenAI that have helped it emerge as a leader in artificial intelligence, according to Dan Romanoff, a senior equity research analyst on the technology, media and telecommunications team for Morningstar.
The company recently commissioned a study through market intelligence firm IDC to see how businesses are leveraging AI.
“The study illustrates the business value of AI, but it really comes to life through the stories of how our customers and partners are innovating today,” Jessica Hawk, corporate vice president of data, AI and digital applications for Microsoft, wrote in a company article. “Customers like Heineken, Thread, Moveworks, the National Basketball Association and so many more are putting AI technologies to work for their businesses and their own customers and employees.”
Microsoft is also pushing its gaming business more toward the cloud, which Romanoff says “will continue to drive the transition from on-premises to cloud solutions, and revenue growth will remain robust with margins continuing to improve for the next several years.”
More from U.S. News
7 High-Yield Covered Call ETFs Income Investors Will Love
5 Biggest ETF Brands and Their Issuers
7 of the Best 5-Star ETFs to Buy
5 Best Virtual Reality Stocks to Buy originally appeared on usnews.com
Update 12/12/23: This story was previously published at an earlier date and has been updated with new information.
