In this article, we will discuss 12 best virtual reality stocks to invest in. If you want to skip our detailed analysis of the virtual reality industry which highlights key trends and major players, you can directly go to the 5 Best Virtual Reality Stocks to Invest In.
Virtual Reality (VR) is a technology that immerses users in a simulated digital environment, often through the use of specialized headsets and other sensory devices. The aim of VR is to create a sense of presence and interaction within a virtual world that can be visually and sometimes audibly or haptically experienced as if it were real. The technology crafts this engrossing encounter for users using devices like VR headsets, glasses, gloves, and bodysuits. Although virtual reality emerged in the 1990s, its true potential, promised three decades ago, is only now beginning to materialize. While VR currently finds its primary applications in gaming and entertainment, its capabilities hold significant promise across various sectors like engineering, design, healthcare, defense, and education. According to a report by Grand View Research, the worldwide market for virtual reality was valued at approximately $59.96 billion in 2022, with projections indicating a compounded annual growth rate (CAGR) of 27.5% from 2023 to 2030.
Currently, conventional VR setups employ VR headsets or multi-projected setups to generate lifelike sensations, mimicking a user’s actual existence within a virtual world. This effect is predominantly achieved through VR headsets, which encompass head-mounted displays—enclosed headsets that prevent external light or real-world visuals from interfering with the virtual domain. Prominent providers of VR headsets encompass massive tech corporations like NVIDIA Corporation (NASDAQ:NVDA), Sony Group Corporation (NYSE:SONY), and naturally, Meta Platforms, Inc. (NASDAQ:META). Enhancements in VR hardware, including the emergence of compact and stylish devices, are anticipated to bolster the wider acceptance of VR both among consumers and across various sectors. Healthcare, workforce training, and manufacturing are foreseen as some of the industries most profoundly influenced by VR’s advancements. Instances of VR applications encompass training simulations for surgeons and production workers, as well as immersive educational encounters within classrooms. An example of such application includes Kansas City University’s Center for Medical Education Innovation (CMEI), a teaching facility that allows medical students to learn how to evaluate, diagnose and treat patients in repetition with real-world simulation through the use of virtual reality and augmented reality (AR) technology.
For now, the market is dominated by the gaming and entertainment sectors, where companies are making substantial investments in the creation of content, software, and hardware tailored for gaming applications. The increasing appeal of virtual theme parks, museums, and arcades contributes significantly to the expansion of this segment. The initial endeavors to integrate VR into video games can be traced back all the way back to the 1980s, with prominent examples like Nintendo’s Virtual Boy and Matter, Inc.’s Power Glove. However, it wasn’t until 2013 that VR gaming truly gained momentum, catalyzed by the introduction of Meta Platforms, Inc. (NASDAQ:META)’s Oculus Rift, which marked the advent of the first consumer-ready VR product. As a testament to its growth, the valuation of the VR gaming market was approximated at $6.26 billion in 2020. Projections indicate that this market is poised to expand to $53.44 billion by 2028, exhibiting a compound annual growth rate exceeding 30%.
Overall, this industry is poised to grow with more companies planning to get involved. Companies like Apple, Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA) are among the many that are making strides in the space and could be at the forefront of the massive opportunity that virtual reality and augmented reality present. If you want to read up on different technological spaces, and their respective market analysis, you can start with our article on the 12 Best Metaverse Stocks To Invest In.
Photo by mahdis mousavi on Unsplash
Our Methodology
For this article we scanned Insider Monkey’s database of 910 hedge funds and picked 12 VR-related companies with the highest number of hedge fund investors. These include various technology companies that are either directly involved in the advancement of virtual reality technology, or are poised to benefit from its expansion.
12. Matterport, Inc. (NASDAQ:MTTR)
Number of Hedge Funds Holders: 10
Matterport, Inc. (NASDAQ:MTTR) stands as a pioneering company in Sunnyvale, California, specializing in 3D data capture and visualization technology. The firm is dedicated to creating solutions that enable the capture, digitization, and seamless sharing of three-dimensional environments. Matterport, Inc. (NASDAQ:MTTR)’s technology finds applications in VR experiences, architecture design, construction planning, and more.
In 2020, Matterport, Inc. (NASDAQ:MTTR) introduced a VR mode to its platform. This enhancement provides users with enhanced visual quality, greater mobility, and the capability to experience 360º Views of spaces featured in specific tours. Additionally, Matterport, Inc. (NASDAQ:MTTR)’s VR technology is actively utilized by its partners, including event planning firm Allseated, to drive sales growth at an expedited rate.
At the end of Q2 2023, 10 hedge funds were long Matterport, Inc. (NASDAQ:MTTR) and disclosed positions worth $10.2 million in the company. Of those, Mark Coe’s Intrinsic Edge Capital was the top shareholder in the company and held a position worth $5.04 million.
Similar to Microsoft Corporation (NASDAQ:MSFT), Apple, Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA), Matterport, Inc. (NASDAQ:MTTR) is poised to reap the benefits from the VR race.
11. Unity Software Inc. (NYSE:U)
Number of Hedge Funds Holders: 30
Unity Software Inc. (NYSE:U) stands as a prominent figure within the realm of real-time 3D content creation, solidifying its position as a dominant force in the VR market. Its platform serves as a toolbox that empowers developers to construct immersive 3D environments that form the very foundation of the virtual world. The company has achieved remarkable financial success, with a 56% year-over-year sales growth in the first quarter of 2023. Furthermore, Unity Software Inc. (NYSE:U) has revised its fiscal 2023 outlook, anticipating even stronger results that are poised to surpass estimates. A revenue of $2.6 billion by the end of 2024 is expected, reflecting an 87% increase in sales compared to the previous year.
Piper Sandler, on June 6, commented that Unity Software Inc. (NYSE:U)’s enduring vision and strategy to establish itself as a favored developer platform for 3D applications could gain strength from Apple’s recent introduction of the Vision Pro spatial computer. In addition to Apple, the presence of Unity Software Inc. (NYSE:U)’s developer job opportunities within TikTok, Meta, Samsung, Snap, and Microsoft suggests a broader interest in augmented reality and virtual reality applications. Piper continued to uphold an Overweight rating on the company, along with a price target of $43.
At the end of the second quarter of 2023, 30 hedge funds in the database of Insider Monkey held stakes worth $2.56 billion in Unity Software Inc. (NYSE:U), compared to 24 in the preceding quarter worth $1.69 billion. Jim Davidson, Dave Roux and Glenn Hutchins’ Silver Lake Partners held the highest stake in the company, worth approximately $1.13 billion.
10. Sony Group Corporation (NYSE:SONY)
Number of Hedge Funds Holders: 31
Sony Group Corporation (NYSE:SONY) crafted its proprietary virtual reality headset, designed to harmonize with its widely acclaimed PlayStation video-game consoles—dubbed the PlayStation VR or PSVR. Following its introduction in 2016, it emerged as a top-performing VR headset, even though its prominence was outshone by the 2020 launch of the Meta Quest 2. However, in 2023, Sony made a pivotal move by revamping the design of the original, which had been in circulation for over six years, giving birth to the PlayStation VR 2, which debuted in February 2023, accompanied by an initial price tag of $550—significantly surpassing the initial cost of $400 for its predecessor.
Goldman Sachs analyst Minami Munakata raised the evaluation of Sony Group Corporation (NYSE:SONY) shares on July 12, shifting the rating from ‘Neutral’ to ‘Buy’ and including the stock in the firm’s ‘conviction buy list’. The driving factor behind this upgrade, as cited by the analyst, was the company’s robust presence in the anime and live games sectors.
Out of the 910 hedge funds tracked by Insider Monkey, 31 of them had stakes in Sony Group Corporation (NYSE:SONY) in the second quarter of 2023. This number was up from 30 in the previous quarter. Mario Gabelli’s GAMCO Investors had the most significant stake in the company in the second quarter, with 1.53 million shares worth $138.2 million.
9. Roblox Corporation (NYSE:RBLX)
Number of Hedge Funds Holders: 35
Roblox Corporation (NYSE:RBLX), a notable online entertainment platform that empowers game creation, can be seen as one of the closest things to a functional metaverse at present. Boasting an impressive 50 million daily active users, Roblox Corporation (NYSE:RBLX) stands as more than a mere video game, encompassing its own digital currency and providing a wide spectrum of unique virtual encounters.
Initiating coverage on June 13, Canaccord analyst Jason Tilchen provided a Buy rating and set a $48 price target for Roblox Corporation (NYSE:RBLX). While initially established as a gaming hub for younger audiences, Roblox Corporation (NYSE:RBLX) has transformed into a premier hub for immersive gaming and social interactions within persistent virtual realms. This evolution has been propelled by continuous investments aimed at introducing more realistic avatars and enhanced communication features. The analyst sees potential for upward revisions in estimates if the company manages to effectively execute strategic initiatives to attract increased spending to the platform, coupled with a long-term opportunity to expand into new verticals.
According to Insider Monkey’s second quarter database, 35 hedge funds were bullish on Roblox Corporation (NYSE:RBLX), compared to 37 funds in the earlier quarter. Catherine Wood’s ARK Investment Management held the largest shareholder position within the company, with $375.5 million worth of stakes.
SaltLight Capital Management made the following comment about Roblox Corporation (NYSE:RBLX) in its Q4 2022 investor letter:
“We’ve used this incremental capital strategy with some of our ‘early-stage’ investments such as Roblox Corporation (NYSE:RBLX), Purple Group, Transaction Capital and Karooooo (Cartrack).
Today, we would like to discuss one of our early-stage investments, Roblox. While there is a risk that we may be premature, mistaken, or even wrong in our evaluation of this opportunity, we see Roblox as a company with the potential to ‘matter’.
Roblox is a 3D real-time content platform that bridges consumers and creators. Instead of being a conventional gaming product, Roblox acts as a tool provider that democratises the creation of 3D real-time user-generated content (UGC)…” (Click here to read the full text)
8. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Funds Holders: 36
Baidu, Inc. (NASDAQ:BIDU) is a prominent Chinese multinational technology enterprise that focuses on Internet-based services, products, and artificial intelligence. It operates from its headquarters located in Beijing’s Haidian District. As one of the global giants in AI and the Internet sector, Baidu, Inc. (NASDAQ:BIDU) has maintained a virtual reality division actively engaged in VR research and development since 2016. When the COVID-19 pandemic began, the company recognized the potential utility of employing its VR technology to potentially facilitate expansive virtual events. This eventually led to XiRang, an invisible web of technological capabilities that the company is developing to support the development of the metaverse.
Morgan Stanley analyst Gary Yu’s upgrade of Baidu, Inc. (NASDAQ:BIDU) on June 20 shifted the rating from Equal Weight to Overweight, accompanied by a raised price target of $190, previously $160. The analyst highlights that Baidu, Inc. (NASDAQ:BIDU) is positioned as the primary beneficiary of China’s substantial $7.4 trillion AI internet opportunity, predicting an estimated 31% CAGR in Baidu, Inc. (NASDAQ:BIDU)’s cloud revenue by the year 2025.
According to Insider Monkey’s second quarter database, 36 hedge funds were bullish on Baidu, Inc. (NASDAQ:BIDU), compared 43 funds in the last quarter. These held a consolidated stake value of $1.75 billion.
7. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Funds Holders: 73
Qualcomm Incorporated (NASDAQ:QCOM) is a multinational corporation based in San Diego, California, with its incorporation in Delaware. It operates at the forefront of semiconductor development, software solutions, and wireless technology services. The company holds pivotal patents in crucial mobile communication standards like 5G, 4G, CDMA2000, TD-SCDMA, and WCDMA.
This past year, Qualcomm Incorporated (NASDAQ:QCOM) announced the new Snapdragon AR2 Gen 1 platform. Made using the state-of-the-art TSMC 4nm manufacturing process and fine-tuned to meet the demands of AR processing, the Snapdragon AR2 Gen 1 platform delivers an impressive 2.5-fold enhancement in AI processing capabilities compared to the XR2 platform, all within a power consumption of less than 1W. The upcoming platform will also make use of Qualcomm’s Snapdragon Spaces XR developer environment, founded on the OpenXR standards and rapidly embraced by a wide-ranging ecosystem, encompassing AR and VR system original equipment manufacturers (OEMs) such as Honor, Motorola, Nubia, OnePlus, Oppo, RedMagic, Sharp, Vivo, Xiaomi, and ZTE.
According to Insider Monkey’s second quarter database, 73 hedge funds were bullish on QUALCOMM Incorporated (NASDAQ:QCOM, compared to 69 funds in the earlier quarter.
Madison Sustainable Equity Fund made the following comment about QUALCOMM Incorporated (NASDAQ:QCOM) in its Q1 2023 investor letter:
“QUALCOMM Incorporated (NASDAQ:QCOM) stock was volatile during the quarter but moved higher in March. Qualcomm fundamentals have been hurt over the last several quarters due to excess smartphone inventories. Management messaged in their recent conference call that inventory issues peaked in their first fiscal quarter and should begin to moderate. They are also seeing excess inventory in their IoT (Internet of Things) business, which will take a couple of quarters to work through. By our estimates, Qualcomm fundamentals should trough in the June quarter with a second-half recovery. Qualcomm remains well positioned to diversify away from smartphones with long-term growth in Auto and IoT.”
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Funds Holders: 112
Advanced Micro Devices, Inc. (NASDAQ:AMD), commonly abbreviated as AMD, is an American multinational semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets.
Advanced Micro Devices, Inc. (NASDAQ:AMD’s chip division has positioned it as a pivotal player in the realm of VR. A prime example is Sony’s PlayStation VR 2 headset, launched in February, which exclusively operates on AMD chips via the PS5. Additionally, AMD’s potent GPUs and processors provide the necessary horsepower for driving headsets like HTC’s Vive, Microsoft’s Windows Mixed Reality, and the Oculus Rift (now under Meta’s umbrella). As the VR sector evolves, it’s probable that more enterprises will seek out AMD’s chips to fulfill their technological requirements.
There were 112 hedge funds long Advanced Micro Devices, Inc. (NASDAQ:AMD) in the second quarter of 2023, up from 91 in the preceding quarter. Philippe Lafont’s Coutue Management was the company’s largest shareholder for the quarter.
Horizon Kinetics LLC said the following about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its first-quarter 2023 investor letter:
“It is among what are considered to be the great technology companies, like Advanced Micro Devices, Inc. (NASDAQ:AMD) and Intel, that one is apt to see some of the greatest confusion between short-term financial results and share price movements, on the one hand, and long-term financial results. The former are exceedingly difficult to predict. Long term results are relatively easy to predict, because they are bound by the limiting realities of the business model. In the case of AMD, that is the business of being a large-scale semi-conductor manufacturer with a more dominant competitor that has a scale economy advantage.
Here’s what people see, remember and act upon. In the past several years, AMD has been the best performing major technology stock. It’s outperformed Apple, Amazon, Google, Meta (Facebook) and Nvidia…” (Click here to read the full text)
Like Microsoft Corporation (NASDAQ:MSFT), Apple, Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD) is a prominent virtual reality stock.
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Disclosure: None. 12 Best Virtual Reality Stocks to Invest In is originally published on Insider Monkey.
