Three Virtual Reality Stocks to Buy

Three virtual reality stocks to buy are examples of technology continuing to shape the trajectory of our future.

The virtual reality (VR) market is projected to grow quickly. While the concept of virtual reality is not novel, it has needed time to advance from dreams to compelling products.

Initially limited mainly to the realm of gaming, today’s virtual reality permeates the daily lives of millions worldwide.

In the coming years, we can expect virtual reality to transcend individual usage and become an integral tool for both individuals and businesses alike. As the technology matures and becomes more accessible, its applications will extend far beyond entertainment. In 2023, 10.8 million VR devices were sold with estimates predicting this number will more than double to 23.8 million by 2025, according to statistics published by the Academy of Animated Art.

Some of the trends for the excitement around VR include a rise in enterprise apps, greater user adoption, major improvements in hardware, simplified development and an increased number of VR services. All of these factors combined suggest a growth in VR products in our households in the years to come.

Three Virtual Reality Stocks to Buy: Market Trends

The prospects for growth in the virtual reality market are highly promising in the coming years. According to a report from Grand View Research, the market is projected to expand at a compound annual growth rate of 27.5% from 2023 to 2030. In 2022, the total market value stood at $59.9 billion, more than double that of 2021, with forecasts indicating a surge to $435 billion in revenue by 2030. This presents a significant opportunity for investors who may consider allocating their finances towards tech stocks in the future.

The recent annual earnings announcement by NVIDIA (NASDAQ: NVDA) underscores the potential for investing in such companies.

“While NVDA is the proverbial “picks and shovels” of the AI gold rush, other large-cap tech companies such as Microsoft Corporation (NASDAQ: MSFT), Meta Platforms Inc. (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOGL), Amazon.com Inc. (NASDAQ: AMZN) and Apple Inc. (NASDAQ: AAPL) have also seen big stock rallies as investors expect these companies to harness the power of generative AI to boost revenues and increase earnings and profitability,” said Jim Woods in February Eagle Eye Opener.

Other key players in the VR field include Barco NV (BAR.BR); CyberGlove Systems, Inc.; Oculus VR, LLC; HTC Corporation (2498.TW); Leap Motion, Inc.; Samsung Electronics Co. Ltd. (005930.KS); Sensics, Inc.; and Sixense Entertainment, Inc.

Find the three ways to profit from virtual reality stocks, also known as “metaverse stocks” below.

Three Virtual Reality Stocks to Buy: Microsoft

The first way of profiting from VR stocks is through Microsoft.

Microsoft Corporation (NASDAQ: MSFT) is a U.S.-based technology company that develops and supports software, services, devices and solutions worldwide. Founded in 1975 and headquartered in Redmond, Washington, the company sells its products through original equipment manufacturers (OEMs), distributions, resellers and directly through digital marketplaces.

The company has around 221,000 full-time employees, and it is known for its Windows operating system and Office productivity suite. Microsoft is divided into three equally sized sectors; productivity and business processes (Microsoft Office, Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (Azure, Windows Server OS, SQL Server) and more personal computing (Windows Client, Xbox, Bing search, display advertising, Surface laptops, tablets, desktops).

Microsoft has been focusing on VR for a while now. By developing products like HoloLens 2, focusing on enhanced academic performance and other accessories, the company has aided its growth.

After discontinuing the Windows Mixed Reality, introduced in 2017 to compete with Meta and HTC VR headsets, the company continues to focus on other applications of VR through products like the Microsoft Mesh app, allowing users and co-workers to meet in virtual space without headsets. Furthermore, through the partnership with Meta, the company enables access to Office apps and the Xbox Cloud Gaming platform.

“Following some selling on earnings news, shares of Microsoft Corp. (MSFT) have worked off the short-term distribution and are poised to trade to fresh highs in the weeks ahead after posting very strong quarterly results coupled with an upbeat outlook,” said Bryan Perry in the February issue of Breakout Options Alert. “The company is clearly out front of the competition in generative AI, along with its other divisions posting strong growth,” he added.

MSFT has a market capitalization of $3.09 trillion as of March 2024. The price-to-earnings (PE) ratio of the company is 37.64, with a forward dividend and yield of 0.72%.

In terms of share-price performance, the company has been on the rise, with +10.81% year-to-date return (YTD) compared to a +7.72% YTD return on the S&P 500, according to Yahoo Finance.

According to Stock Rover, the company’s overall rating stands at 96/100 points compared to its peers. The company is doing well on growth (100), efficiency (100), and financial strategy rating (80). On the other hand, it lags on valuation (33), dividends (60) and momentum rating (82).

The direct competitors of Microsoft include Apple Inc. (NASDAQ: AAPL), Oracle Corporation (NYSE: ORCL) and Adobe Inc. (NASDAQ: ADBE).

Source: StockCharts.com

Three Virtual Reality Stocks to Buy: Meta

The second way of profiting from VR stocks is through Meta.

Meta Platforms, Inc. (NASDAQ: META) is an internet content and information company, incorporated in 2004 and headquartered in Menlo Park, California. The company engages in the development of products enabling people to connect and share information with friends and family through mobile devices, personal computers, virtual reality headsets and wearable devices globally. Meta employs around 67,317 employees worldwide and its products are used by nearly 4 billion active users.

“Now, while this is just anecdotal evidence, the fact is that the Meta Quest VR was one of the most popular gifts this holiday season, and that embrace has not gone unnoticed by Wall Street,” said Jim Woods in the December 28, 2023 issue of Bullseye Stock Trader, when he recommended buying the stock.

Known for pivoting toward the metaverse, a virtual space for people to interact with a computer-generated environment, META is producing VR headsets, like Meta Quest, and other associated equipment. Most recently, in October 2023, the company released the Meta Quest 3, with plans to release the next smart glasses in 2025, and AR (augmented reality) glasses two years later.

“I think increasingly in our modern time, the real world is really this combination of the physical world that we inhabit and this digital world that we’re building,” said Mark Zuckerberg, the founder, chairman and CEO of Meta, during the product introduction on Sept. 27, 2023, at the Meta Connect conference.

META is a near fair value stock, with 51 analysts out of 59 recommending a strong buy or buy. The market capitalization of the company is $1.28 trillion, and the PE ratio stands at 33.81. Meanwhile, the forward dividend and yield is at 0.40%.

The latest financial results from Q4 released in Feb. 2024, show a revenue (12-month period) of $134.902 million in 2023, an increase of 16% compared to the previous year. “We’ve made a lot of progress on our vision for advancing AI and the metaverse,” commented Zuckerberg in a press release.

In comparison to its peers, the company boasts a score of 85/100 according to Stock Rover. META is doing well on growth (99), efficiency (97), and momentum rating (97), while at the same time, it ranks poorly on dividends (3) and valuation (23).

The main competitors of META include Alphabet Inc. (NASDAQ: GOOGL), Spotify Technology S.A. (NYSE: SPOT) and Doordash, Inc. (NASDAQ: DASH).

Source: StockCharts.com

Three Virtual Reality Stocks to Buy: NVIDIA

The third way of profiting from VR stocks is through NVIDIA.

NVIDIA Corporation (NASDAQ: NVDA) is a leading technology developer of semiconductors and graphics processing units (GPU). It was incorporated in 1993 and headquartered in Santa Clara California. The company provides graphics and computer networking solutions globally.

GPUs, generally used to enhance computing platform experience in PCs, have emerged as a vital semiconductor used in artificial intelligence (AI). Apart from AI GPUs, NVDA also has a software platform Cuda, for AI model development and training. While mainly focusing on these products, the company also currently employs around 26,000 people and is in the process of expanding its data center networking capabilities.

To expand its market offering, the company has also ventured into VR. In January 2024, it unveiled new GeForce RTX 40 SUPER Series graphics cards, RTX games, G-SYNC technologies, Generative AI innovations, enhancements for RTX Video Super Resolution, GeForce NOW games and features and more. In particular, the GeForce RTX GPUs provide an immersive VR experience and are compatible with all top headsets including Meta’s Quest, HP, HTC, Microsoft and Valve.

“Nvidia has been the “poster child” of AI enthusiasm because NVDA makes the type of semiconductor chips that power generative AI and demand for those chips has gone through the roof,” said Jim Woods in the Feb. 21 issue of The Deep Woods.

Nvidia’s impressive financial results for Q4 and fiscal 2024 revealed revenue of $22.1 billion, up 22% from Q3, and 265% from the same quarter a year ago. At the same time, the full-year revenue increased by 126% to $60.9 billion, according to NVIDIA’s press release on February 21, 2024. Meanwhile, the Data Center has also recorded a quarterly high with a revenue of $18.4 billion, up 409% from the fiscal fourth quarter a year ago.

Boasting a market capitalization of $2.163 trillion, the company has a PE ratio of 72.52 and a forward dividend yield of 0.02%, according to Yahoo Finance. Overall, the analyst consensus rating on Stock Rover indicates that 36 analysts out of 39 suggest a strong buy or buy option.

When compared to its peers, the company scores 93/100 on Stock Rover. NVIDIA is doing particularly well on momentum (100), growth (100), efficiency (95) and financial strategy ratings (87). However, it is behind on valuation (26) and dividend ratings (33).

The company’s main competitors included Broadcom Inc. (NASDAQ: AVGO), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and Advanced Micro Devices, Inc. (NASDAQ: AMD).

Source: StockCharts.com

Metaverse ETF

While many investors would consider investing in individual stocks, some might want to opt for an exchange-traded fund (ETF) such as Global X Metaverse ETF (NASDAQ: VR). The benefits are threefold; high growth potential, expanding horizons venturing into more potential applications beyond gaming and unconstrained approach in terms of sector or geographic reach.

VR has $2.56 million in assets under management and a total expense ratio of 0.50%. It invests mainly in sectors like communication services (67.24%), information technology (22.88%), financial services (6.99%) and consumer discretionary (2.90%). Geographically, it invests in the United States, Japan, China, South Korea, Sweden, France, Taiwan and Ireland.

The fund includes 40 holdings including its top 10 of Coinbase Global Inc. (NASDAQ: COIN), Nintendo Co., Ltd. (7974.T), Unity Software Inc. (NYSE: U), Snap Inc. (NYSE: SNAP), Meta Platforms, Inc. (NASDAQ: META), Take-Two Interactive Software, Inc. (NASDAQ: TTWO), NVIDIA Corporation (NASDAQ: NVDA), Roblox Corporation (NYSE: RBLX), Tencent Holdings Limited (HKSE: 0700.HK) and NetEase, Inc. (NASDAQ: NTES).

The Global x Metaverse Index is the underlying index for this fund and is designed to provide exposure to companies interested in the metaverse, a set of virtual, three-dimensional, real-time rendered spaces and simulations that can be experienced by users regardless of their physical location.

Future in VR

With stellar revenue predictions indicating strong growth potential and a significant rise in interest surrounding virtual reality, the outlook for the industry seems exceptionally promising. As advancements in technology continue to drive innovation and consumer adoption, investing in virtual reality stocks presents an enticing opportunity for wealth accumulation. By capitalizing on this trend, investors can position themselves to benefit from the continued expansion and evolution of the virtual reality market, potentially yielding substantial returns over time.