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 Meta Inc. (NASDAQ:META) 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 team of developers working in unison to create the company’s messaging application.
Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) builds technological products that allow people to share, connect, grow businesses, and find communities. These products help people connect through personal computers, mobile devices, virtual reality (VR), mixed reality (MR) headsets, and wearables.
The company has made significant progress toward AR and VR technologies, recently releasing an augmented reality prototype called Orion, one of its most ambitious projects. Reality Labs, Meta Inc.’s (NASDAQ:META) division dedicated to AR and VR innovations, is known for its substantial financial investments in these emerging consumer platforms.
Meta Inc. (NASDAQ:META) is increasingly becoming a powerhouse in AI and AR. The company’s Reality Labs attained several milestones this quarter, revolving particularly around the integration of AI and wearables. Its Ray-Ban Meta AI glasses are a popular product, which are great-looking glasses that allow users to take photos and videos, listen to music, and even take calls. In addition, they are fitted with Meta AI.
Meta Inc.’s (NASDAQ:META) new updates will enable these glasses to not only answer user questions throughout the day but also help users remember things, offer them suggestions, and even translate other languages right in the ear for them. Demand for these advanced glasses continues to be very strong, as its new clear edition, released at Connect in September, sold out almost immediately. The company takes the second spot on our list of the best augmented reality stocks to buy now.
Alger Focus Equity Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q1 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) operates the world’s largest social network, with over 3 billion monthly active users across its platform. The company generates revenue predominantly from advertising. which accounts for over 95% of its total revenue, evenly split between North America and international markets. During the quarter, shares contributed to performance following the release of strong fiscal fourth quarter operating results, with revenues and earnings surpassing analyst estimates. The better-than- expected revenues were attributed to strong advertiser demand and Al-driven ad improvements. Moreover, the company materially raised its fiscal first quarter sales and earnings guidance above analysts’ estimates, buoyed by continued strong advertiser demand trends and enhancements to Reels. Advantage+. Click-to-message, and Shop Ads. Further, management noted that ongoing investment in Al is enhancing user engagement and advertiser returns through improved targeting and measurement. Separately, Meta authorized a new share repurchase plan representing approximately 5% of its market capitalization and announced the initiation of its first dividend, implying an approximate 0.4% yield.”
Overall, META ranks 2nd 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 META 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.
