In this article, we discuss 12 best augmented reality stocks to invest in. If you want to see more stocks in this selection, check out 5 Best Augmented Reality Stocks to Invest In.
According to the International Data Corporation (IDC), global spending on augmented reality and virtual reality is expected to reach $13.8 billion this year and increase to $50.9 billion in 2026. This puts the five-year compound annual growth rate for AR/VR spending at 32.3%. Some of the leading use cases of augmented reality include gaming, industrial maintenance, and training. Ramon T. Llamas, research director of Mobile Devices and AR/VR at IDC, said on November 30:
“The AR/VR market has been taking slow but sure steps in recent years and is poised to take longer strides in the years to come. Recently announced and upcoming hardware from major brands showcase clear improvement from first-generation devices. The deeper proliferation into current use cases and the addition of new ones highlight the versatility that AR/VR brings. And along with these is a whole host of services to help make them happen. The result: a maturing market ready to thrive for consumers and commercial users alike.”
The growing demand for AR and VR technologies is also one of the main factors driving the metaverse market. The global metaverse market was valued at $100.27 billion in 2022 and is expected to reach $1,527.55 billion by 2029, at a CAGR of 47.6% during the forecast period. Since AR is one of the driving forces behind the metaverse, and the applications of the technology are increasing incrementally, some of the best augmented reality stocks to invest in include Alphabet Inc. (NASDAQ:GOOG), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL).
Our Methodology
We selected the following augmented reality stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
Photo by David Dvořáček on Unsplash
Best Augmented Reality Stocks to Invest In
12. Nintendo Co., Ltd. (OTC:NTDOY)
Number of Hedge Fund Holders: 2
Nintendo Co., Ltd. (OTC:NTDOY) develops, manufactures, and sells home entertainment products in Japan, the Americas, Europe, and internationally. Nintendo Co., Ltd. (OTC:NTDOY) provides AR Games and AR hardware such as the Nintendo Switch Joy-Con, which has two cameras for immersive AR gaming, streaming, and photography.
On September 7, Goldman Sachs analyst Minami Munakata initiated coverage of Nintendo Co., Ltd. (OTC:NTDOY) with a Buy rating and an 83,000 yen price target. The analyst expects Nintendo to maintain a high level of earnings, even in the middle of the product cycle for Nintendo Switch.
According to Insider Monkey’s data, Lyrical Asset Management and Ancora Advisors held stakes worth $143,000 and $1,000 in Nintendo Co., Ltd. (OTC:NTDOY) at the end of the third quarter of 2022, respectively.
Like Alphabet Inc. (NASDAQ:GOOG), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL), Nintendo Co., Ltd. (OTC:NTDOY) is one of the best augmented reality stocks to monitor.
Here is what Ensemble Capital has to say about Nintendo Co., Ltd. (OTC:NTDOY) in its Q3 2021 investor letter:
“Nintendo: Having had a banner year and a quarter last year with both its Switch console sales and megahit Animal Crossing: New Horizons game release, helped in part by COVID restrictions, Nintendo posted sales that were down -10% vs a year ago while operating income was down -17%. Consequently, the stock has had a challenging performance in the quarter, falling 19%. However, looking past the one-time nature of the comparison effects of the COVID bump last year, the more important fundamental metric to track for the company’s future business is its installed base of Switch consoles. The Switch installed base of customers has grown by about 50 million units to over 85 million since 2019, aided by a surge in interest in family gaming. We believe the family gaming trend is an important and persistent one and the huge increase in the installed base bodes well for future game and digital subscription sales going forward.”
11. Matterport, Inc. (NASDAQ:MTTR)
Number of Hedge Fund Holders: 7
Matterport, Inc. (NASDAQ:MTTR) is a California-based spatial data company, focusing on digitization and datafication of the built world. Matterport, Inc. (NASDAQ:MTTR) has partnered with Austria-based ViewAR to create immersive and interactive AR experiences. Matterport, Inc. (NASDAQ:MTTR) had a record third quarter, posting total revenue of $38 million, up 37% year-over-year and ahead of the company’s guidance. The growth was supported by strength across all three revenue channels.
On November 11, Deutsche Bank analyst Bhavin Shah maintained a Buy recommendation on Matterport, Inc. (NASDAQ:MTTR) but lowered the firm’s price target on the shares to $5 from $7 following the Q3 results.
According to Insider Monkey’s data, 7 hedge funds were bullish on Matterport, Inc. (NASDAQ:MTTR) at the end of September 2022, and Sculptor Capital held a prominent stake in the company, consisting of 400,000 shares worth $1.5 million.
Here is what Miller Opportunity Equity had to say about Matterport, Inc. (NASDAQ:MTTR) in its Q4 2021 investor letter:
“Matterport Inc. (MTTR) continued to be a strong contributor during the quarter after Matterport’s ability to contribute to the building of the metaverse was brought to light. The company reported 3Q results that missed consensus due to unexpected supply constraints and labor shortage in its capture services. The company reported total sales of $27.7M below consensus of $29.1M but with gross profit beating coming in at $15.2M versus $15.1M expected leading to an EPS loss of -$0.06 slightly better than consensus of -$0.07. The company lowered full-year revenue guidance to $107-110M down from $120-126M previously while also lowering FY22 topline guidance to 50% growth from 65% at the time of the PIPE transaction due to continuing supply constraints and labor shortage.”
10. Axon Enterprise, Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 27
Axon Enterprise, Inc. (NASDAQ:AXON) is an Arizona-based company that develops, manufactures, and commercializes conducted energy devices under the TASER brand in the United States and internationally. In April 2022, Axon Enterprise, Inc. (NASDAQ:AXON) announced the acquisition of Foundry 45, a company that provides virtual and augmented reality training applications to global enterprise customers. Axon Enterprise, Inc. (NASDAQ:AXON) is one of the best augmented reality stocks to monitor.
On November 8, Axon Enterprise, Inc. (NASDAQ:AXON) reported a Q3 non-GAAP EPS of $0.60 and a revenue of $312 million, outperforming Wall Street forecasts by $0.11 and $32.1 million, respectively. The company’s full year 2022 revenue guidance has improved to a range of $1.15 billion to $1.16 billion versus a $1.11 billion consensus.
Northland analyst Michael Latimore on November 9 raised the price target on Axon Enterprise, Inc. (NASDAQ:AXON) to $160 from $140 and kept an Outperform rating on the shares after the company “handily beat” Q3 estimates. Axon Enterprise, Inc. (NASDAQ:AXON) also raised FY22 guidance and he lifted his own FY22 and FY23 estimates following the Q3 report, given the company’s “leading technologies and market tailwinds,” the analyst told investors.
Among the hedge funds tracked by Insider Monkey, 27 funds reported owning stakes in Axon Enterprise, Inc. (NASDAQ:AXON) at the end of Q3 2022, compared to 26 funds in the prior quarter. Neal C. Bradsher’s Broadwood Capital is the largest stakeholder of the company, with 760,062 shares worth $88 million.
Here is what Baron Discovery Fund has to say about Axon Enterprise, Inc. (NYSE:AXON) in its Q1 2022 investor letter:
“Axon Enterprise, Inc. (NYSE:AXON) is a public safety-oriented company that sells its products to governments and law enforcement agencies around the world. Its mission is to “…make the bullet obsolete” using non-lethal TASER® devices combined with digital cameras, cloud-based software, and virtual reality training. This array of technology aims to provide better relationships between law enforcement and its constituent communities, and to reduce fatal outcomes dramatically when stressful confrontations occur. Axon takes its mission seriously and has an extensive ethics committee that includes members of law enforcement and activist communities. Axon claims that with usage of body cameras, complaints against police departments are down 88% and use of force is down 58%. We believe the company is a premier part of the solution to prevent bad actors in law enforcement and the mistrust that has resulted from those bad actors.
The company has three major product lines: first, high-definition cameras (sensor division) worn on the body or mounted on vehicles (newer products incorporate live streaming and automated license plate readers); second, subscription-based digital evidence software (evidence.com) that stores body camera and third-party video allowing for evidentiary chain of custody, search, and report writing (officer court time reduced by 70%); and third, non-lethal TASER devices (that can temporarily incapacitate dangerous and violent actors using an electrical shock) that save lives by avoiding discharging firearms (the company claims 258,000 lives have been saved so far). When used in combination, its cameras provide GPS officer location and live streaming, while its software can provide real-time operations mapping of active situations. In the future, Axon seeks to add consumer safety products (launching in 2022) that will automatically notify 911 if deployed, drone-based camera products, more VR training, and additional cloud-based software, including evidence software usable by prosecutors and defense attorneys, which could be a $1 billion market on its own. (Click here to read full text)
9. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 27
Sony Group Corporation (NYSE:SONY) is one of the premier augmented reality stocks to invest in. The company designs, develops, and sells electronic equipment, instruments, and devices to the consumer, professional, and industrial markets worldwide. In February 2022, Sony Group Corporation (NYSE:SONY) announced that it has signed an agreement with Niantic, a company that provides augmented reality mobile games, for joint collaboration in the area of auditory AR for headphones.
On November 1, Sony Group Corporation (NYSE:SONY) reported a FQ2 GAAP EPS of ¥212.29 and a revenue of ¥2751.88 billion, up 16.1% on a year-over-year basis. For full-year 2022, the company posted an updated sales outlook of ¥11.6 trillion, up from the prior outlook of ¥11.5 trillion. The net income outlook was also raised to ¥840 billion from ¥800 billion.
Cowen analyst Doug Creutz on November 2 maintained an Outperform rating on Sony Group Corporation (NYSE:SONY) but trimmed the price target on the shares to $102 from $144. The analyst said he lowered his sum of the parts-based price target given shrinking multiples for segment comps and his dollar-denominated price target is also coming down due to a less favorable yen exchange rate.
According to Insider Monkey’s Q3 data, 27 hedge funds were long Sony Group Corporation (NYSE:SONY), compared to 26 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 4.7 million shares worth $303.8 million.
Aristotle Capital made the following comment about Sony Group Corporation (NYSE:SONY) in its Q3 2022 investor letter:
“Sony Group Corporation (NYSE:SONY), the global provider of video games and consoles, image sensors, and music, as well as movies, was a major detractor for the period. The share price of the company has struggled this year following its strong performance in 2021. Signs of a slowdown in the gaming industry (as people seem inclined to take on outdoor activities as pandemic fears have subsided), combined with sales of its PlayStation 5 that have been held up by a global parts shortage, have led to gaming‐related software sales falling more than 20% year‐over‐year. Rather than focusing on short‐term demand dislocations, we focus on the company’s ability to continue migrating videogame users toward the firm’s subscription offerings, as well as its capacity to leverage content across its video, music and gaming platforms. We are also impressed with the expansion of Sony’s Music segment, which has been supported by the pervasiveness of streaming services. Management’s ongoing work to improve the company’s TV and film studios is bearing fruit as well, with sales growing 67% year‐over‐year for its Pictures segment as its regional strategy has taken hold, including recent progress made toward solidifying a merger plan with India‐based Zee Entertainment. All of this is to say we remain excited by the oligopolistic nature of the businesses Sony operates in, and the future prospects for the company given its leadership in image sensors, music publishing and gaming consoles.”
8. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 34
Unity Software Inc. (NYSE:U) is a California-based company that creates and operates an interactive real-time 3D content platform. The company provides specialized tools for AR creators and enables efficient workflows for AR development. Unity Software Inc. (NYSE:U) is one of the best augmented reality stocks to invest in.
Citi analyst Jason Bazinet on November 21 reiterated a Buy recommendation on Unity Software Inc. (NYSE:U) but lowered the price target on the shares to $54 from $61. The analyst updated his model following the Q3 results and continues to like Unity Software Inc. (NYSE:U) “given robust top-line growth and diversification into other verticals beyond gaming.”
According to the third quarter database of Insider Monkey, 34 hedge funds were bullish on Unity Software Inc. (NYSE:U), up from 23 funds in the last quarter. Cathie Wood’s ARK Investment Management is the biggest stakeholder of the company, with 11.2 million shares worth nearly $359 million.
Here is what ClearBridge Investments All Cap Growth Strategy has to say about Unity Software Inc. (NYSE:U) in its Q1 2022 investor letter:
“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still under penetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.”
7. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 42
Snap Inc. (NYSE:SNAP) is a California-based camera company that provides Spectacles, an eyewear product that connects with Snapchat and captures photos and video from a human perspective. The company also offers advertising products, including AR ads and Snap ads. Snap Inc. (NYSE:SNAP) is one of the top augmented reality stocks to consider. Snap Inc. (NYSE:SNAP)’s Daily Active Users were 363 million in Q3 2022, an increase of 57 million, or 19% year-over-year. On October 20, the board of directors also authorized a share repurchase program of up to $500 million of its Class A common stock.
On October 21, Credit Suisse analyst Stephen Ju reaffirmed an Outperform rating on Snap Inc. (NYSE:SNAP) but lowered the firm’s price target on the shares to $17 from $22 following the Q3 earnings report.
According to Insider Monkey’s data, Snap Inc. (NYSE:SNAP) was part of 42 hedge fund portfolios at the end of the third quarter of 2022, compared to 44 in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the leading stakeholder of the company, with approximately 22 million shares worth $215 million.
Here is what Silver Ring Value Partners has to say about Snap Inc. (NYSE:SNAP) in its Q2 2022 investor letter:
“I bought SNAP put options in the fall of 2021, when the stock was above $70 and its market cap around $100B. With revenues of ~ $4B in 2021, this put the company at a whopping 25x sales. I refer to a multiple of sales only because the company wasn’t yet making a profit, despite its astronomical valuation.
I strongly believed that market participants were over-extrapolating a few years’ worth of high sales growth too far into the distant future. This growth was likely temporarily boosted as advertisers experimented during COVID, attempting to reach customers in new ways. In other words, it was benefiting from unsustainable forces.
Having followed the media space for two decades, one thing that I have observed is that change happens slowly. Advertisers rarely abandon an old medium in a wholesale fashion or embrace a new one in such a way. Instead, they shift their budgets incrementally, experimenting and measuring Return on Investment (ROI) along the way…” (Click here to see the full text)
6. Etsy, Inc. (NASDAQ:ETSY)
Number of Hedge Fund Holders: 45
Etsy, Inc. (NASDAQ:ETSY) is a New York-based company that operates online marketplaces connecting buyers and sellers in the United States, the United Kingdom, Germany, Canada, Australia, France, and India. In 2020, Etsy, Inc. (NASDAQ:ETSY) climbed on the AR bandwagon with the launch of an updated iOS app that uses augmented reality features to help consumers visualize their shopping experiences. The company posted strong Q3 sales and expects robust gross merchandise sales for the full-year 2022.
On December 1, BTIG analyst Marvin Fong raised the price target on Etsy, Inc. (NASDAQ:ETSY) to $137 from $119 and maintained a Buy rating on the shares. A post Black Friday survey suggests that shoppers were more active on Etsy, Inc. (NASDAQ:ETSY) than the company expected them to be, the analyst told investors in a research note. He added that Etsy appears to be “tracking well” relative to the management’s GMV guidance of $3.6 billion to $4.0 billion.
According to Insider Monkey’s third quarter database, 45 hedge funds were long Etsy, Inc. (NASDAQ:ETSY), compared to 29 funds in the earlier quarter. Harris Associates is a significant position holder in the company, with approximately 2 million shares worth $189.5 million.
In addition to Alphabet Inc. (NASDAQ:GOOG), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL), Etsy, Inc. (NASDAQ:ETSY) is one of the premier AR stocks to invest in.
Here is what ClearBridge Investments Mid Cap Growth Strategy has to say about Etsy, Inc. (NASDAQ:ETSY) in its Q3 2022 investor letter:
“Stock selection in the consumer discretionary sector proved a tailwind to performance. Etsy (NASDAQ:ETSY), which operates a number of online marketplaces for craft and artisan goods, delivered second quarter results that demonstrated the company’s pricing power, cash flow generation, and margin upside remain intact. While Etsy is experiencing declines in gross merchandise sales, it is seeing better than expected take rates and improved margins. We believe the company is well-positioned to grow advertising spending on its marketplace, bring in new buyers and strengthen its e-commerce advantages.”
Click to continue reading and see 5 Best Augmented Reality Stocks to Invest In.
Suggested articles:
Disclosure: None. 12 Best Augmented Reality Stocks to Invest In is originally published on Insider Monkey.
