3 Stocks to Invest in Virtual Reality

At a time when investors are fairly skeptical of tech stocks, now may seem like an odd time to get into them. Virtual reality (VR).

But the massive size of the VR market (which includes augmented reality and mixed reality) will be worth about $252 billion by 2028, up from $28 billion in 2021.

This market opportunity is too big to ignore, and there are some big companies investing in hardware and software to make it happen. Here’s why apple (AAPL -1.46%), Alphabet (GOOG -0.37%) (GOOGLE -0.66%)and Nvidia (NVDA -2.25%) has great VR potential.

A person wearing virtual reality glasses.

Image source: Getty Images.

New Apple headphones may soon become a reality

The iPhone maker has long been rumored to be working on a mixed reality headset (with some VR and AR capabilities) that could debut next year.

Well-known Apple analyst Ming-Chi Kuo believes that the company will introduce its mixed reality headset in 2023 and could ship 1.5 million units in the first year.

While the timing is still uncertain, some insights have already been revealed, including that the company has already demonstrated the device to board members (indicative of the potential for it to go on sale soon).

According to a recent Bloomberg report, the company is also creating a dedicated operating system for the headset called xrOS and will launch a separate app store.

Apple could benefit from the headset not only through device sales — the headsets are rumored to retail for around $2,000 — but also through in-app sales.

While investors may have to wait a little longer for Apple’s headphones, the company’s stock is a good deal now. Apple shares are trading at 24 times the company’s earnings price profit (P/E ratio) was around 32 this time last year.

Alphabet’s mobile dominance could translate to VR

Alphabet’s Google has the most VR experience of any company on this list. The company introduced its ill-fated augmented reality device, Google Glass, in 2013 (it’s still available in enterprise form), and until last year it had a nifty VR headset called Google Cardboard.

So what is Google currently working on? Some Google insiders have spilled some of the virtual reality beans, as they spoke to The Verge earlier this year and said the company is working on a new AR device that could launch in 2024.

At the time, the company had at least 300 employees working on a secret project, hiring people specifically to build an operating system for a device called Project Iris.

While the device isn’t available yet, investors should consider the potential of the world’s largest mobile software maker releasing VR/AR headsets.

Google has already proven it can make high-quality devices — its Pixel phones have top-notch hardware and software — and with many competitors looking to enter the VR/AR space, Google can use its software prowess. them in this space.

In addition to VR’s potential, Alphabet also looks more attractive right now, as the company’s P/E ratio now stands at 19, up from around 28 this time last year.

Nvidia chips could power the future of VR

While Apple and Google are betting on the VR space with hardware and software, Nvidia has a unique opportunity with its GPUs.

The company is already the leader in the GPU market, and the company’s high-end GPUs, used for everything from gaming to artificial intelligence, are the logical choice for creating virtual worlds.

Nvidia has already created developer tools and software to help companies and individuals use the company’s GPUs. virtual world building.

The company recently launched Omniverse Cloud, which it describes as “a suite of cloud services for artists, developers, and enterprise teams to design, publish, manage, and experience metaverse applications.”

An estimate of the size of the AR/VR chip market from Emergen Research said it could reach $19.3 billion by 2030, up from less than $3 billion last year.

Tech stocks aren’t cheap, as Nvidia’s stock trades at about 76 times the company’s earnings. But Nvidia’s strong position in games, leading GPU technology, and commitment to releasing VR tools for developers give Nvidia stock plenty of potential in the growing VR market.

VR is still around the corner

The virtual reality market is still nascent, which means investors should be patient as it grows.

But there’s a shift toward VR among many tech companies right now, and it could eventually become a significant segment for each of these companies.

For example, the VR headset market that Apple is tracking is poised to grow from less than 15 million headset shipments this year to nearly 35 million in 2026.

Additionally, both Apple and Google’s pursuit of VR software could help each company expand its service revenue through in-app purchases. And for Nvidia, VR will allow the company to sell chips in a whole new space metaverse.

The size of the mass virtual reality market is a good indicator that VR will be big enough to help move the needle for these stocks, but investors will likely have to wait for VR to take shape over the next few years before seeing the benefits.

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