We recently published a list of 10 Best Virtual Reality Stocks To Buy Now. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other best virtual reality stocks.
Overview of the Global VR Market
Virtual Reality is a computer-generated simulation that allows users to interact with a three-dimensional environment. The four elements that characterize virtual reality and differentiate it from other technologies such as augmented reality and mixed reality are a 3D-simulated environment, immersion, sensory engagement, and realistic interactivity, as revealed by HP.
According to a report by Fortune Business Insights, the global virtual reality market size was valued at $25.11 billion in 2023 and is expected to grow from $32.64 billion in 2024 to $244.84 billion by 2032, at a compound annual growth rate of 28.6% during the forecast period (2024-2032).
Region-wise, North America is expected to dominate the global VR market over the forecast period. Another rapidly growing region is Asia Pacific with growth driven by the rising demand for immersive technologies in emerging economies. China, one of the major distributors of head-mounted VR devices and other hardware, is forecasted to have the highest market share in the region. Simultaneously, Europe is the early adopter of virtual solutions in the automotive industry and will be experiencing significant growth, with Germany and the UK as its leading markets.
How is Virtual Reality Transforming Today’s World?
The virtual reality devices used today have their foundation laid on the first head-mounted augmented reality display “The Sword of Damocles” which was introduced by Ivan Sutherland in 1968. While firms such as Sega and Nintendo developed VR gaming systems in the 1980s and 1990s, it was not until the 2010s that high-quality VR headsets boasting powerful graphics and motion-tracking technology came to the market.
While gaming has been driving the popularity of VR, the potential of the technology has been realized in a multitude of other industries. The American shipping company UPS committed to millions for the advanced training of its drivers, with the firm’s industry-leading training powered by the use of virtual reality in an industrial training environment. Before drivers operate an actual delivery vehicle, the company’s Driving Simulator provides realistic driving experiences.
Virtual reality and augmented reality have also penetrated the healthcare sector as they offer transformative opportunities for medical training, patient care, and therapeutic interventions. The treatment domains in which these technologies are used to treat patients are diverse and include pediatric diagnostics and treatments, pain management, mental health, neurological disorders, surgery planning, intraoperative procedures, telemedicine, as well as post-operative and other rehabilitation therapies. The penetration is evident from the fact that the US FDA has authorized 69 medical devices that incorporate augmented reality and virtual reality.
Virtual Reality is also changing the game for the entertainment industry, especially for artists. Fortnite witnessed a record turnout of more than 12 million attendees to its virtual concert featuring the hip-hop superstar Travis Scott in 2020. Therefore, VR applications continue to spread around today’s world. The renowned luxury car manufacturer BMW has materialized virtual reality experiences in the automotive space. The company expanded its revolutionary driving experience with BMW M Mixed Reality which tends to blur the boundaries between the physical and virtual worlds through state-of-the-art VR/MR technologies.
A development team working together to create the next version of Windows.
Our Methodology
In order to compile a list of the 10 best virtual reality stocks to buy now, we utilized stock screeners, ETFs, and online rankings to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best virtual reality stocks to buy now have been arranged in ascending order of their hedge fund holders, as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
The renowned technology company Microsoft Corporation (NASDAQ:MSFT) empowers people and organizations to achieve more with technology. The company has segments namely Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Microsoft sells its products through OEMs, distributors, and resellers as well as directly through digital marketplaces, online, and retail stores.
Microsoft is an important player in the VR space. The company focuses on enterprises with its HoloLens device, an ergonomic, untethered self-contained holographic device with enterprise-ready applications to increase user accuracy and output. HoloLens 2 combined with software solutions is a hands-free computer that goes where one goes, sees what one sees, and does what one says. It enables acting with precision and working together with those who are remote on a holographic canvas overlayed in one’s physical environment. HoloLens 2 has diverse applications in industries including manufacturing, education, and healthcare.
Additionally, Microsoft Mesh is a platform for creating and sharing immersive 3D spaces for realistic virtual connections. Mesh encompasses an avatar system, spatial audio, virtual event production tools, and synchronizes experiences and interactivity across users on PC and VR. Leading companies such as Accenture are using Microsoft Mesh to expand its digital campus, One Accenture Park, to elevate onboarding and train new employees globally while PwC is bringing employees together to strengthen the company culture with immersive wellness experiences, such as guided and self-led tours and orientations.
For the FY25 Q1, Microsoft Corporation (NASDAQ:MSFT) recorded revenue of $65.6 billion, up 16% year-over-year. The firm witnessed a solid start to its fiscal year, driven by the continued strength of the Microsoft Cloud, which surpassed $38.9 billion in revenue. The segments remained robust. Revenue in Productivity and Business Processes was up 12%, revenue in Intelligent Cloud increased 20%, and revenue in More Personal Computing climbed 17%, year-over-year. Simultaneously, the firm’s AI business is on track to surpass an annual revenue run rate of $10 billion next quarter which will mark it as the fastest business in MSFT’s history to hit this milestone.
Thus, the growth opportunities for Microsoft Corporation (NASDAQ:MSFT) to look forward to are vast. The company can potentially continue enabling immersive experiences which are experiencing rising attention in today’s ever-evolving and innovating world. The stock is held by 279 hedge funds, as of 2024’s second quarter.
Overall, MSFT ranks 1st on our list of best virtual reality stocks to buy now. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
