We recently published a list of 10 Best Augmented Reality Stocks To Buy Now. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other best augmented reality stocks to buy now.
According to a report by Mordor Intelligence, the global augmented reality (AR) market has a market size of $42.48 billion as of 2024. The market is expected to grow at a compound annual growth rate (CAGR) of 42.36% and reach $248.38 billion by 2029. The Asia Pacific region is expected to be the fastest-growing market, but the largest market for the domain is anticipated to be North America.
A significant portion of the market is mobile AR, which leverages the globally spread use of smartphones, tablets, and other smart devices. Estimates show that around 1.7 billion devices are capable of supporting mobile AR as of 2024. The widespread and massive existing smartphone user base lends mobile AR a key advantage.
While AR glasses such as Orion have to face steep challenges to establish themselves as a widespread global phenomenon, mobile AR benefits from “zero-cost” hardware as a majority of people around the globe already own smart devices. A well-known example is Pokémon GO, a 2016 video game where players explore their surroundings to find virtual characters on their phones. The game quickly became a global sensation due to its existing hardware: mobile phones.
Future Trends in the Augmented Reality Industry
Although the AR market is around a decade away from attaining its full potential, several technological advancements in the industry are accelerating its pace. Tech giants have been running after the dream of AR and mixed reality for years, and are investing billions of dollars in the endeavor. According to SkyQuest, the largest investment is being poured into training and industrial maintenance, with figures reaching as much as $4.1 billion in the field of AR. Apart from this, private firms, VCs, and even some governments are financing AR research institutes and teams.
The primary user base of augmented reality includes industries such as aerospace and defense, healthcare, consumer, and retail. Hospitals and other medical care startups are continually taking strides in employing immersive modalities to help healthcare professionals. With surgeons increasingly relying on AR to tackle the potential risks of healthcare procedures, the rate of errors in the industry is expected to continually fall, and so is the number of potentially unsafe surgeries. According to SkyQuest, the AR segment in the healthcare industry is expected to reach $1.2 billion by 2024.
Another expected future trend in the industry is the increased application of AR in the automotive industry. With autonomous vehicles becoming more common across the globe, the integration of AR in these vehicles is supporting the broader AR industry. Through overlaying digital data in the real world, AR technology helps improve the driver and the autonomous system’s comprehension of their environment. In addition to several other features, consumers can interact with virtual 3D models of vehicles with the help of AR technology in showrooms, allowing them to visualize several customizations.
Our Methodology
In this article, we reviewed online rankings and ETFs to determine 25 companies operating in the AR space. We then selected the 10 most popular stocks among elite hedge funds. We sourced the hedge fund data from Insider Monkey’s database, as of Q3 2024. Our focus was on companies producing AR-related hardware, software, or technologies used to develop augmented reality products. However, we also included companies that offer services essential to the AR industry, like semiconductor chips.
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).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) provides its customers with a range of products and services. It offers advanced tools for AR and VR developers through its Amazon Web Services (AWS) platform. Some of its offerings in the AR/VR space include Room Decorator, which allows users to visualize various pieces of furniture in their space, and Virtual Try-On, which enables users to see how clothing might look on them.
Amazon.com, Inc.’s (NASDAQ:AMZN) AWS segment grew by 19.1% year-over-year in fiscal Q3 2024, and now stands at an annualized run rate of $110 billion. The company has seen significant reacceleration of growth in its AWS segment for the last four quarters as of fiscal Q3 2024. Much of this growth is attributed to its broad functionality, strong security, solid operational performance, and deep partner community, lending it a competitive industry advantage.
Amazon.com, Inc. (NASDAQ:AMZN) is also seeing more enterprises grow their footprint in the cloud, reflected in part by the recent customer deals with companies like Toyota, Sony, National Australia Bank, Booking.com, Capital One, ANZ Banking Group, Itaú Unibanco, Fast Retailing, and T-Mobile.
Patient Capital Opportunity Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) moved higher throughout the second quarter as AI demand helped to reaccelerate growth in their AWS business. It looks as though the cloud business is finally past the customer cost optimization period with customers restarting their cloud migrations as well as expanding spend on AI projects. Despite the top and bottom-line improvement seen in the first quarter, the company is significantly underearning its long-term potential as it continues to reinvest aggressively in the business. With 80% of global retail sales still being done in physical stores and 85% of global IT spending still on-premises, we see a long-run way for the dominant player in the cloud, retail, and increasingly logistics and advertising space.”
Overall, AMZN ranks 1st on our list of best augmented reality stocks to buy now. While we acknowledge the potential of augmented reality stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN 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.
