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 QUALCOMM Inc. (NASDAQ:QCOM) 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 technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
QUALCOMM, Inc. (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Inc. (NASDAQ:QCOM) develops and commercializes foundational technologies for the wireless industry, including 3G, 4G, and 5G wireless connectivity and high-performance and low-power computing, including on-device AI. The company operates across various high-growth markets, including autonomous vehicles and smartphones. It supplies chips to key industry players, including BMW, Huawei, and Samsung. QUALCOMM’s Snapdragon augmented reality technology is the next generation of mobile computing, merging the actual world with virtual objects to create a seamless reality.
In fiscal Q4 2024, it delivered revenue of $10.2 billion, with its chipset business accounting for a significant share: $8.7 billion. The company recently unveiled its latest flagship mobile platform Snapdragon 8 Elite, featuring its second-generation custom Oryon CPU. The release created considerable positive momentum for the company, so it expanded its portfolio further with the addition of the Snapdragon X Plus 8-core compute platform.
QUALCOMM Inc. (NASDAQ:QCOM) now has 58 platforms either in development or launched across this X series portfolio. It is working with Meta (NASDAQ:META) to enable spatial computing, as Meta’s Quest 3S is powered by the Snapdragon XR2 Gen 2. In addition, the Ray-Ban Meta glasses are also powered by Snapdragon AR1 Gen 1. They are being advanced with new AI features, such as navigation and location assistance, hands-free access to user digital lives, and real-time speech translation.
QUALCOMM Inc. (NASDAQ:QCOM) is also powering Snap Inc’s (NYSE:SNAP) recently unveiled next-generation Spectacles through the dual Snapdragon processors. These Spectacles are aimed at creators diving into advanced AR experiences.
O’keefe Stevens Advisory stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its Q2 2024 investor letter:
“During the quarter, the A.I. rally broadened beyond the obvious players of Nvidia, AMD, and hyperscalers. QUALCOMM Incorporated (NASDAQ:QCOM), a long-standing investment, is gaining recognition for integrating artificial intelligence into mobile phones. Qualcomm’s A.I. on-device capabilities enable real-time language translation, improved voice recognition, and sophisticated imaging techniques as A.I. becomes more integral to mobile experiences. Qualcomm benefits by leading the market in providing robust, efficient, and versatile A.I. solutions. A.I. could be the first technology advancement in several years to accelerate the smartphone replacement cycle as users desire these advanced capabilities.”
Overall, QCOM ranks 8th 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 QCOM 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.