In this article, we will take a detailed look at the 17 Best Augmented Reality Stocks To Invest In.
Just a few years back analysts were calling augmented reality the next big thing and AR startups were attracting huge investments. But now the sole focus of VCs and investment firms remains AI and AR seems to have taken a back seat. Does that mean the AR and VR revolution everyone was talking about ended before even starting? Experts don’t think so. In fact they believe the rise of generative AI has opened up new horizons for augmented reality technologies. A report by NSFlow said that integration of AI and augmented reality will help companies produce realistic digital worlds, characters and artwork.
The report said AI will be used in multi-sensory technologies, including haptic gloves and devices that create immersive experiences. More and more companies are now seeing the potential the combo of AI and AR could unlock. In June 2023, Meta Platforms announced that its Reality Labs would be pursuing augmented reality and immersive reality technologies. And in December 2023 the company said its Ray Ban smart glasses showed how people would use AI and AR in immersive reality products in the future.
Apple’s blockbuster spatial computing headset Vision Pro is also a manifestation of the killer AI+VR combo. The device combines AI and VR to develop a spatial operating system and a 3D user interface to give a realistic experience to its user.
A technician wearing a head-mounted augmented reality headset examining a MEMS device.
Methodology
For this article we scanned Insider Monkey’s database of 910 hedge funds and picked 17 augmented reality companies with the highest number of hedge funds. We preferred companies which make actual AR-related hardware and software products or develop technologies that are used by other companies in the development of augmented reality products.
Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator
17. Vuzix Corp (NASDAQ:VUZI)
Number of Hedge Fund Investors: 3
Rochester, New York-based Vuzix makes wearable VR and AR wearable display technology. In November, Vuzix Corp (NASDAQ:VUZI) announced that it entered into a partnership with Quanta Computer to support the manufacturing of next generation lightweight smart glasses for broader markets. VUZI ranks 17th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
Vuzix Corp shares have not been performing well, having lost about 60% over the past 12 months. That’s why hedge funds are ejecting the stock from their portfolios since just three hedge funds reported owning stakes in Vuzix Corp at the end of the third quarter of 2023, down from seven funds in the previous quarter.
16. MicroVision Inc (NASDAQ:MVIS)
Number of Hedge Fund Investors: 6
MicroVision Inc (NASDAQ:MVIS) makes lidar sensing technologies primarily used in automotive safety systems. MicroVision Inc’s (NASDAQ:MVIS) lidar technologies play a key role in the AR world since they allow AR and VR systems to perceive surroundings and refine immersive experience. MicroVision Inc’s (NASDAQ:MVIS) patents related to lidar are important in the AR industry and could help the stock significantly in the future.
In 2020, MicroVision Inc shared in a video its AR micro-display module technology which uses its existing Gen3 MEMS.
15. Immersion Corporation (NASDAQ:IMMR)
Number of Hedge Fund Investors: 12
Immersion Corporation (NASDAQ:IMMR) develops and licenses touch feedback technology, which is of significant importance in the augmented reality and virtual reality industry. As of the end of the third quarter of 2023, 12 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Immersion Corporation. IMMR ranks 15th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
Immersion Corporation has a PE ratio of 5.8 and a dividend yield of about 2.6% as of January 15. In December 2023 Immersion Corporation upped its dividend by 50%.
14. Enovix Corp (NASDAQ:ENVX)
Number of Hedge Fund Investors: 20
Battery technology company Enovix Corp (NASDAQ:ENVX) makes it to our list of the best AR stocks hedge funds are buying as Enovix Corp makes batteries for AR, VR and IoT devices.
In 2021 Enovix Corp said it started making a new cell design for Augmented Reality (AR) glasses for a top-tier consumer electronics company.
13. Snap Inc (NYSE:SNAP)
Number of Hedge Fund Investors: 25
Snap Inc (NYSE:SNAP) is one of the most important companies in the augmented reality space, providing both software and hardware tools and suite for the development of AR and VR-related apps. Snap Inc’s (NYSE:SNAP) Lens Studio for AR apps development is highly popular among developers.
In December, Guggenheim increased its rating on Snap Inc shares to Buy from Neutral and raised its price target to $23 from $9. The analyst firm is bullish on the stock amid its expectation of a rebound in ad spending in 2024.
As of the end of the third quarter of 2023, 25 hedge funds tracked by Insider Monkey had stakes in Snap Inc. The biggest hedge fund stakeholder of Snap Inc was Karthik Sarma’s SRS Investment Management which owns a $469 million stake in Snap Inc.
Artisan Developing World Fund stated the following regarding Snap Inc. in its fourth quarter 2023 investor letter:
“Top contributors to performance for the quarter included social media platform Snap Inc. (NYSE:SNAP). Snap benefited from signs of improved industry demand, improved customer adoption of Snap’s direct response technology platform, and a new partnership with Amazon.”
12. Unity Software Inc (NYSE:U)
Number of Hedge Fund Investors: 27
With AR Foundation, Unity MARS, XR Interaction toolkit and many other software and tools for AR games and apps, Unity Software Inc (NYSE:U) is a notable name in the AR and VR industry. Unity Software Inc’s (NYSE:U) tools are used by millions of developers for the development of AR and VR apps.
Earlier this month Citi Thematic Equity Strategy published a list of stocks expected to gain value in 2024 based on specific themes. Unity Software Inc made it to the list on the back of “digital leisure” theme.
In its fourth quarter 2023 investor letter, ClearBridge Large Cap Growth Strategy stated the following regarding Unity Software Inc.:
“We also sold Unity Software Inc. (NYSE:U), a select growth name purchased in early 2022 to participate in the growth of the global video game market, as our thesis no longer remains valid. Via M&A, Unity has diversified away from its game engine subscription business into the less differentiated advertising segment and most recently saw negative customer reaction to price increases, calling into question the offering’s pricing power.”
11. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Investors: 21
One of the most important pieces of hardware technologies in the AR and VR industry is OLED microdisplays. The quality of immersive experiences in AR and VR apps depends upon the quality of OLED microdisplays. Sony Group Corporation (NYSE:SONY) is one of the leaders in this space as Sony Group Corporation Semiconductor Solutions Corporation(SSS) make AR headsets and OLED microdisplays that are used in gaming, entertainment and business use. The stock ranks 11th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
As of the end of the third quarter of 2023, 21 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Sony Group Corporation.
10. Roblox Corp (NYSE:RBLX)
Number of Hedge Fund Investors: 34
Metaverse, VR and AR are often seen as abstract and speculative ideas. But if one were to point to a place where metaverse is actually in action, it would be Roblox Corp (NYSE:RBLX). Roblox Corp allows people to develop their own virtual worlds and play inside them. Roblox Corp allows developers to make AR- and VR-related apps for virtual worlds. Roblox Corp last year started launching new AI-based tools that would help people who don’t have coding knowledge develop games and virtual worlds.
Roblox Corp talked about AI during its Q3 earnings call:
“We’ve highlighted we’ve got 70 ML pipelines running right now inside the company that goes all the way from our safety systems, moderation systems, real-time translation systems, gets into our search and discovery systems, and then gets into more of the user-facing things, like Roblox Assistant. I think the big takeaway is, we want to run super high volume inference, for example, voice, as much as possible on our own hardware so we can do this extremely efficiently. And I would highlight on our edge data centers using as much as possible the same hardware to run inference. It gives us the ability in parts of the world that are not as active to use that for inference.
As far as the collection of tools we’re using, I would say generally yes, yes, yes, open source. The market is in a really interesting time as far as what people are building and training and tuning and distilling and optimizing internally. And we’re building a full AI internal platform that many of our teams will then use for high performance inference.”
Read the entire earnings call transcript here.
9. PTC Inc (NASDAQ:PTC)
Number of Hedge Fund Investors: 38
Industrial AR technology company PTC Inc (NASDAQ:PTC) ranks 9th in our list of the best augmented reality (AR) stocks to buy now. PTC Inc also owns Vuforia, an enterprise AR platform.
8. Autodesk Inc (NASDAQ:ADSK)
Number of Hedge Fund Investors: 51
Autodesk Inc (NASDAQ:ADSK) offers a plethora of software tools, platforms and plugins that help companies and developers in making AR-related products and apps. Some notable AR offerings of Autodesk Inc include Fusion, a cloud-based 3D CAD/CAM/CAE software for product design; VRED, a 3D virtual prototyping software for automotive design, and many other such tools.
RiverPark Large Growth Fund made the following comment about Autodesk, Inc. in its Q2 2023 investor letter:
“Autodesk, Inc. (NASDAQ:ADSK): Autodesk was our next top detractor despite quarterly results reported in late May that were in line with expectations. For 1Q, revenue grew 12%, Remaining Performance Obligation (RPO) grew 15%, and the company generated $714 million of FCF, which increased 69% year over year. Profitability for the company was strong, with a 32% non-GAAP operating margin for the quarter, and management reiterated its outlook for the year.
Autodesk has a near monopoly on software for designing, building, and managing buildings, as well as software for infrastructure and manufacturing plants, prototyping software for manufacturers of products (including autos, machinery, and consumer products) and document sharing. As a result, we believe ADSK’s business is very sticky. The company expects to grow revenue mid-teens annually over the next several years, and, as we have seen in similar SaaS businesses, as revenue scales, operating margins are expected to expand significantly from their current 32% to more than 40%, more in-line with peers. We believe that ADSK shares can grow along with its mid-teens free cash flow growth over the next several years.”
7. Texas Instruments Inc (NASDAQ:TXN)
Number of Hedge Fund Investors: 53
Texas Instruments plays a key role in the development of AR-related hardware. The company’s circuits and reference designs help companies develop lightweight, reliable systems for augmented reality (AR) glasses.
Diamond Hill Large Cap Strategy made the following comment about Texas Instruments Incorporated (NASDAQ:TXN) in its Q3 2023 investor letter:
“Shares of semiconductor manufacturing company Texas Instruments Incorporated (NASDAQ:TXN) underperformed as revenue guidance was slightly below market expectations. We believe these demand trends to be transitory and have a favorable view of the company’s long-term prospects and superior competitive position.”
6. QUALCOMM Inc (NASDAQ:QCOM)
Number of Hedge Fund Investors: 67
QUALCOMM Inc’s (NASDAQ:QCOM) semiconductor technologies are powering many key AR and VR devices in the world. QUALCOMM Inc’s (NASDAQ:QCOM) Snapdragon® augmented reality technology powers extended reality, AR, VR and immersive reality experiences. The stock ranks 6th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
QUALCOMM Inc’s (NASDAQ:QCOM) Snapdragon XR1 AR Smart Viewer is a type of AR glasses that overlay digital information into your field of vision
In its third quarter 2023 investor letter, Bonsai Partners stated the following regarding QUALCOMM Incorporated:
“Robustness at the product level exists differently than in other layers of the value chain. Product diversification follows the same principle, but product control isn’t related to vertical integration. Product control exists in multiple forms, such as switching costs or happy customers who don’t want to buy elsewhere. However, one often overlooked dimension of product-level robustness is adaptability. Some businesses offer goods and services that behave like shapeshifters; they naturally adapt to the market’s needs regardless of how the world changes. Adaptability also serves as a hedge against the unknown.
Consider our investment in Taiwan Semiconductor, which enjoys a highly adaptive product portfolio. If we compare TSMC to a fabless chip maker like QUALCOMM Incorporated (NASDAQ:QCOM), investing in Qualcomm is a bet that its products will retain their technological advantage over time. Meanwhile, TSMC sells a service that naturally produces whatever the end customer wants. There is little need for brilliant product-level foresight; TSMC just needs to maintain its process and service level advantages, allowing it to manufacture whatever the market demands. TSMC’s product portfolio is robust compared to most other semiconductor companies because it naturally adapts to technological and market-driven shifts. Instead of product-level risk, TSMC’s core risks are geopolitical.
In the past, I would have been more drawn to a company like Qualcomm given its clear technological lead in baseband modems, but if I’m honest with myself, I don’t know if their technologies will retain their dominance ten years from now. Qualcomm’s products express a relatively high degree of rigidity in a fast-changing industry, and this is something I prefer to avoid.
While robustness isn’t a guarantee of company survival, it acts as a natural buffer that insulates the companies we invest in against the unknown. The better we are at identifying robustness for our portfolio, the longer we also will endure.”
5. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 110
Advanced Micro Devices Inc. (NASDAQ:AMD) plays a critical role in the AR industry by providing chips that power immersive experience in many important AR and VR device. Back in 2021, Magic Leap, which makes head-mounted augmented reality display devices, announced that it was partnering with Advanced Micro Devices Inc. according to which the chipmaker will make semi-custom SOC for Magic Leap. Recently, Advanced Micro Devices Inc. said it is helping Magic Leap make devices that help firefighters get advanced training to tackle high risk scenarios using augmented and virtual reality without ever putting them in harm’s way.
Artisan Global Opportunities Fund made the following comment about Advanced Micro Devices, Inc. in its Q2 2023 investor letter:
“Among our top contributors were Advanced Micro Devices, Inc. (NASDAQ:AMD), NU Holdings and Netflix. AMD’s data center CPUs are used in the cloud service provider (CSP) servers. In addition to the broader secular tailwind from cloud adoption, the company has a performance and pricing advantage over Intel, which we believe will enable it to continue capturing market share. However, the recent stock price rally was due to growing excitement around the company’s AI exposure. It will launch its new MI300 graphics processing unit (GPU) chip later this year to compete against the dominant market leader NVIDIA. Similar to its approach that won market share from Intel within the CPU market, AMD’s product will aim to provide similar performance at a more attractive price. AMD is already working with Microsoft and Meta, while Amazon publicly stated that it is evaluating AMD’s inferencing chips. Using assumptions around the total GPU market size, potential market share gains and price points, our research indicates this could be a $20 billion opportunity for AMD. That would nearly double its revenue. While the company has not historically missed many deadlines, there is execution risk as it works to manufacture and distribute these complex chips at scale, which, combined with an elevated valuation after the stock’s strong performance run, led us to trim the position.”
4. Adobe Inc (NASDAQ:ADBE)
Number of Hedge Fund Investors: 112
Adobe Inc (NASDAQ:ADBE) ranks 4th in our list of the best augmented reality stocks hedge fund are buying. Adobe Inc offers Adobe Aero, a software that allows developers to make AR-based virtual worlds.
As of the end of the third quarter of 2023, 112 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Adobe Inc.
Here is what Polen Global Growth has to say about Adobe Inc. in its Q3 2023 investor letter:
“Both Alphabet and Adobe’s businesses continue to perform well. With respect to Adobe, the most recent quarter delivered more of the same with constant currency revenue growing 13%, margin expansion, and over 2% of shares outstanding repurchased for non-GAAP earnings growth of over 20%. We believe its approach to GenAI through Firefly, which guarantees safe content because it trains on Adobe Stock, will continue to be attractive to enterprises. The counter to GenAI, and something we are keeping an eye on with Alphabet and Adobe, is that it requires heavy investment. While both businesses can leverage their scale and manage costs in other areas, we expect the investment in future growth through GenAI will weigh on company-wide margins over the near term.”
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 134
Apple Inc (NASDAQ:AAPL) upped its AR and VR game by launching the much-awaited $3500 Apple Vision Pro mixed reality headset.
TF International Securities analyst Ming-Chi Kuo recently said in a note that Vision Pro is likely to sell out.
“If not, Vision Pro may take longer to become a success, which would be detrimental to the short-term stock price performance of Apple and its supply chain,” Ming-Chi Kuo added.
Wedgewood Partners stated the following regarding Apple Inc. in its fourth quarter 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL) was also a top contributor to performance during the fourth quarter. The Company’s services segment revenue growth accelerated to +16% over last year, one of the fastest growth rates since Covid-19 lockdowns, helping drive +11% growth in earnings per share. The strength in the Company’s services segment was aided by over 1 billion paid subscribers across Apple’s media platforms. We estimate that there are more than 2 billion iOS devices in Apple’s global installed base, which still represents a very large addressable share of their current subscriber count. Apple also continues to innovate across its hardware portfolio, with custom silicon for nearly all its device form factors. More recently, the Company launched its new line of Mac computers, which included their M3 family of chips, including the M3 Max, which contains up to an astonishing 92 billion transistors. Apple’s long-term strategy of creating products with customized hardware and software should continue to differentiate their products and help drive solid revenue growth and expense leverage across the Company’s ecosystem.”
2. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 180
NVIDIA Corp’s (NASDAQ:NVDA) chips are used in several AR and VR devices and the company offers several product suites especially designed to enhance extended reality and immersive reality experiences. For example, its NVIDIA CloudXR™ Suite enables XR applications to stream high-fidelity extended reality (XR) to Android and iOS devices over performant networks. NVIDIA Corp also offers SDKs for AR and VR development.
In its fourth quarter 2023 investor letter, ClearBridge Large Cap Growth Strategy stated the following regarding NVIDIA Corporation:
“Much of that differential can be attributed to the performance of the Magnificent Seven (Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla), a basket of mega cap growth stocks that accounted for 47.8% of the benchmark return for the quarter and 65.4% for 2023.
The ClearBridge Large Cap Growth Strategy maintains exposure to six of the seven stocks, with overweights in Amazon.com, Meta and NVIDIA Corporation (NASDAQ:NVDA). Those three stocks, as well as Microsoft, were among the leading contributors to Strategy performance for the quarter. Microsoft and Nvidia continued to be supported by strong execution and leadership positions in the implementation of generative artificial intelligence (AI).
These are high-quality, cash flow generative businesses that we will continue to own, actively adjusting our positioning sizes based on risk/reward and portfolio construction priorities. With Nvidia shares more than tripling in 2023, we opportunistically took profits throughout the year, an approach that continued in the fourth quarter with additional trims that brought the position down to 6% of overall assets.
Active management of our mega cap exposure contributed to the Strategy outperforming the benchmark both in the fourth quarter and through the narrow leadership market of 2023. We also attribute these improved results to solid stock picking, being opportunistic in adding to or initiating new positions in growth companies at or near the bottom of their earnings cycle, and maintaining a commitment to diversification across our three buckets of growth: select, stable and cyclical.”
1. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 234
With its Reality Labs division working full time on AR and VR related products and Quest headsets, Meta Platforms is the leading AR stock hedge funds are investing in. Mark Zuckerberg envisions AR glasses to start replacing smartphones in the future, and this is the source of Meta Platforms’ continuous investments in this space. The Verge reported last year that Meta Platforms plans to release its first pair of smart glasses with a display and a neural interface smartwatch designed to control them by 2025.
Wedgewood Partners stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was a leading contributor to performance for the quarter – and the year. Core advertising revenue growth accelerated to +23% while operating margin rebounded strongly from a year ago. The Company has been a consistent beneficiary of artificial intelligence (AI) over the past several years, investing aggressively in deep learning recommendation systems that help power its products, which reach nearly half the population of the planet. Meta Platform’s AI investments, combined with its massive scale, allow the Company to quickly spin up new products across its digital advertising real estate to reinforce its competitive positioning. For example, the Company’s relatively new Reels product is just over two years old, yet it has driven a +40% increase in the time Instagram users spend on the app. Reels content and other content served up to Instagram users is often driven by several very large and expensive AI recommendation systems that must sort through billions of datapoints in real time and come up with a probability of a user engagement. The Company is one of the few companies that has been able to consistently and profitably monetize AI technologies for shareholders and we continue to hold it has a top position in our portfolios.”
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Disclosure. None. 17 Best Augmented Reality Stocks To Invest In was initially published on Insider Monkey.
