17 Best Augmented Reality Stocks To Invest In
In this article, we will take a detailed look at the 17 Best Augmented Reality Stocks To Invest In. For a quick overview of such stocks, read our article 5 Best Augmented Reality Stocks To Invest In.
Just a few years back analysts were calling augmented reality the next big thing and AR startups were attracting huge investments. But now the sole focus of VCs and investment firms remains AI and AR seems to have taken a back seat. Does that mean the AR and VR revolution everyone was talking about ended before even starting? Experts don't think so. In fact they believe the rise of generative AI has opened up new horizons for augmented reality technologies. A report by NSFlow said that integration of AI and augmented reality will help companies produce realistic digital worlds, characters and artwork.
The report said AI will be used in multi-sensory technologies, including haptic gloves and devices that create immersive experiences. More and more companies are now seeing the potential the combo of AI and AR could unlock. In June 2023, Meta Platforms announced that its Reality Labs would be pursuing augmented reality and immersive reality technologies. And in December 2023 the company said its Ray Ban smart glasses showed how people would use AI and AR in immersive reality products in the future.
Apple's blockbuster spatial computing headset Vision Pro is also a manifestation of the killer AI+VR combo. The device combines AI and VR to develop a spatial operating system and a 3D user interface to give a realistic experience to its user.
A technician wearing a head-mounted augmented reality headset examining a MEMS device.
Methodology
For this article we scanned Insider Monkey's database of 910 hedge funds and picked 17 augmented reality companies with the highest number of hedge funds. We preferred companies which make actual AR-related hardware and software products or develop technologies that are used by other companies in the development of augmented reality products. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator
17. Vuzix Corp (NASDAQ:VUZI)
Number of Hedge Fund Investors: 3
Rochester, New York-based Vuzix makes wearable VR and AR wearable display technology. In November, Vuzix Corp (NASDAQ:VUZI) announced that it entered into a partnership with Quanta Computer to support the manufacturing of next generation lightweight smart glasses for broader markets. VUZI ranks 17th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
Vuzix Corp (NASDAQ:VUZI) shares have not been performing well, having lost about 60% over the past 12 months. That’s why hedge funds are ejecting the stock from their portfolios since just three hedge funds reported owning stakes in Vuzix Corp (NASDAQ:VUZI) at the end of the third quarter of 2023, down from seven funds in the previous quarter.
16. MicroVision Inc (NASDAQ:MVIS)
Number of Hedge Fund Investors: 6
MicroVision Inc (NASDAQ:MVIS) makes lidar sensing technologies primarily used in automotive safety systems. MicroVision Inc's (NASDAQ:MVIS) lidar technologies play a key role in the AR world since they allow AR and VR systems to perceive surroundings and refine immersive experience. MicroVision Inc's (NASDAQ:MVIS) patents related to lidar are important in the AR industry and could help the stock significantly in the future.
In 2020, MicroVision Inc (NASDAQ:MVIS) shared in a video its AR micro-display module technology which uses its existing Gen3 MEMS.
15. Immersion Corporation (NASDAQ:IMMR)
Number of Hedge Fund Investors: 12
Immersion Corporation (NASDAQ:IMMR) develops and licenses touch feedback technology, which is of significant importance in the augmented reality and virtual reality industry. As of the end of the third quarter of 2023, 12 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Immersion Corporation (NASDAQ:IMMR). IMMR ranks 15th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
Immersion Corporation (NASDAQ:IMMR) has a PE ratio of 5.8 and a dividend yield of about 2.6% as of January 15. In December 2023 Immersion Corporation (NASDAQ:IMMR) upped its dividend by 50%.
14. Enovix Corp (NASDAQ:ENVX)
Number of Hedge Fund Investors: 20
Battery technology company Enovix Corp (NASDAQ:ENVX) makes it to our list of the best AR stocks hedge funds are buying as Enovix Corp (NASDAQ:ENVX) makes batteries for AR, VR and IoT devices.
In 2021 Enovix Corp (NASDAQ:ENVX) said it started making a new cell design for Augmented Reality (AR) glasses for a top-tier consumer electronics company.
13. Snap Inc (NYSE:SNAP)
Number of Hedge Fund Investors: 25
Snap Inc (NYSE:SNAP) is one of the most important companies in the augmented reality space, providing both software and hardware tools and suite for the development of AR and VR-related apps. Snap Inc's (NYSE:SNAP) Lens Studio for AR apps development is highly popular among developers.
In December, Guggenheim increased its rating on Snap Inc (NYSE:SNAP) shares to Buy from Neutral and raised its price target to $23 from $9. The analyst firm is bullish on the stock amid its expectation of a rebound in ad spending in 2024.
As of the end of the third quarter of 2023, 25 hedge funds tracked by Insider Monkey had stakes in Snap Inc (NYSE:SNAP). The biggest hedge fund stakeholder of Snap Inc (NYSE:SNAP) was Karthik Sarma's SRS Investment Management which owns a $469 million stake in Snap Inc (NYSE:SNAP).
Artisan Developing World Fund stated the following regarding Snap Inc. (NYSE:SNAP) in its fourth quarter 2023 investor letter:
“Top contributors to performance for the quarter included social media platform Snap Inc. (NYSE:SNAP). Snap benefited from signs of improved industry demand, improved customer adoption of Snap’s direct response technology platform, and a new partnership with Amazon.”
12. Unity Software Inc (NYSE:U)
Number of Hedge Fund Investors: 27
With AR Foundation, Unity MARS, XR Interaction toolkit and many other software and tools for AR games and apps, Unity Software Inc (NYSE:U) is a notable name in the AR and VR industry. Unity Software Inc's (NYSE:U) tools are used by millions of developers for the development of AR and VR apps.
Earlier this month Citi Thematic Equity Strategy published a list of stocks expected to gain value in 2024 based on specific themes. Unity Software Inc (NYSE:U) made it to the list on the back of "digital leisure" theme.
In its fourth quarter 2023 investor letter, ClearBridge Large Cap Growth Strategy stated the following regarding Unity Software Inc. (NYSE:U):
“We also sold Unity Software Inc. (NYSE:U), a select growth name purchased in early 2022 to participate in the growth of the global video game market, as our thesis no longer remains valid. Via M&A, Unity has diversified away from its game engine subscription business into the less differentiated advertising segment and most recently saw negative customer reaction to price increases, calling into question the offering’s pricing power.”
11. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Investors: 21
One of the most important pieces of hardware technologies in the AR and VR industry is OLED microdisplays. The quality of immersive experiences in AR and VR apps depends upon the quality of OLED microdisplays. Sony Group Corporation (NYSE:SONY) is one of the leaders in this space as Sony Group Corporation (NYSE:SONY) Semiconductor Solutions Corporation(SSS) make AR headsets and OLED microdisplays that are used in gaming, entertainment and business use. The stock ranks 11th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
As of the end of the third quarter of 2023, 21 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Sony Group Corporation (NYSE:SONY).
10. Roblox Corp (NYSE:RBLX)
Number of Hedge Fund Investors: 34
Metaverse, VR and AR are often seen as abstract and speculative ideas. But if one were to point to a place where metaverse is actually in action, it would be Roblox Corp (NYSE:RBLX). Roblox Corp (NYSE:RBLX) allows people to develop their own virtual worlds and play inside them. Roblox Corp (NYSE:RBLX) allows developers to make AR- and VR-related apps for virtual worlds. Roblox Corp (NYSE:RBLX) last year started launching new AI-based tools that would help people who don’t have coding knowledge develop games and virtual worlds.
Roblox Corp (NYSE:RBLX) talked about AI during its Q3 earnings call:
"We’ve highlighted we’ve got 70 ML pipelines running right now inside the company that goes all the way from our safety systems, moderation systems, real-time translation systems, gets into our search and discovery systems, and then gets into more of the user-facing things, like Roblox Assistant. I think the big takeaway is, we want to run super high volume inference, for example, voice, as much as possible on our own hardware so we can do this extremely efficiently. And I would highlight on our edge data centers using as much as possible the same hardware to run inference. It gives us the ability in parts of the world that are not as active to use that for inference.
As far as the collection of tools we’re using, I would say generally yes, yes, yes, open source. The market is in a really interesting time as far as what people are building and training and tuning and distilling and optimizing internally. And we’re building a full AI internal platform that many of our teams will then use for high performance inference."
Read the entire earnings call transcript here.
9. PTC Inc (NASDAQ:PTC)
Number of Hedge Fund Investors: 38
Industrial AR technology company PTC Inc (NASDAQ:PTC) ranks 9th in our list of the best augmented reality (AR) stocks to buy now. PTC Inc (NASDAQ:PTC) also owns Vuforia, an enterprise AR platform.
8. Autodesk Inc (NASDAQ:ADSK)
Number of Hedge Fund Investors: 51
Autodesk Inc (NASDAQ:ADSK) offers a plethora of software tools, platforms and plugins that help companies and developers in making AR-related products and apps. Some notable AR offerings of Autodesk Inc (NASDAQ:ADSK) include Fusion, a cloud-based 3D CAD/CAM/CAE software for product design; VRED, a 3D virtual prototyping software for automotive design, and many other such tools.
RiverPark Large Growth Fund made the following comment about Autodesk, Inc. (NASDAQ:ADSK) in its Q2 2023 investor letter:
“Autodesk, Inc. (NASDAQ:ADSK): Autodesk was our next top detractor despite quarterly results reported in late May that were in line with expectations. For 1Q, revenue grew 12%, Remaining Performance Obligation (RPO) grew 15%, and the company generated $714 million of FCF, which increased 69% year over year. Profitability for the company was strong, with a 32% non-GAAP operating margin for the quarter, and management reiterated its outlook for the year.
Autodesk has a near monopoly on software for designing, building, and managing buildings, as well as software for infrastructure and manufacturing plants, prototyping software for manufacturers of products (including autos, machinery, and consumer products) and document sharing. As a result, we believe ADSK’s business is very sticky. The company expects to grow revenue mid-teens annually over the next several years, and, as we have seen in similar SaaS businesses, as revenue scales, operating margins are expected to expand significantly from their current 32% to more than 40%, more in-line with peers. We believe that ADSK shares can grow along with its mid-teens free cash flow growth over the next several years.”
7. Texas Instruments Inc (NASDAQ:TXN)
Number of Hedge Fund Investors: 53
Texas Instruments plays a key role in the development of AR-related hardware. The company's circuits and reference designs help companies develop lightweight, reliable systems for augmented reality (AR) glasses.
Diamond Hill Large Cap Strategy made the following comment about Texas Instruments Incorporated (NASDAQ:TXN) in its Q3 2023 investor letter:
“Shares of semiconductor manufacturing company Texas Instruments Incorporated (NASDAQ:TXN) underperformed as revenue guidance was slightly below market expectations. We believe these demand trends to be transitory and have a favorable view of the company’s long-term prospects and superior competitive position.”
6. QUALCOMM Inc (NASDAQ:QCOM)
Number of Hedge Fund Investors: 67
QUALCOMM Inc's (NASDAQ:QCOM) semiconductor technologies are powering many key AR and VR devices in the world. QUALCOMM Inc's (NASDAQ:QCOM) Snapdragon® augmented reality technology powers extended reality, AR, VR and immersive reality experiences. The stock ranks 6th in our list of the best augmented reality (AR) stocks to buy according to hedge funds.
QUALCOMM Inc's (NASDAQ:QCOM) Snapdragon XR1 AR Smart Viewer is a type of AR glasses that overlay digital information into your field of vision
In its third quarter 2023 investor letter, Bonsai Partners stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM):
“Robustness at the product level exists differently than in other layers of the value chain. Product diversification follows the same principle, but product control isn’t related to vertical integration. Product control exists in multiple forms, such as switching costs or happy customers who don’t want to buy elsewhere. However, one often overlooked dimension of product-level robustness is adaptability. Some businesses offer goods and services that behave like shapeshifters; they naturally adapt to the market’s needs regardless of how the world changes. Adaptability also serves as a hedge against the unknown.
Consider our investment in Taiwan Semiconductor, which enjoys a highly adaptive product portfolio. If we compare TSMC to a fabless chip maker like QUALCOMM Incorporated (NASDAQ:QCOM), investing in Qualcomm is a bet that its products will retain their technological advantage over time. Meanwhile, TSMC sells a service that naturally produces whatever the end customer wants. There is little need for brilliant product-level foresight; TSMC just needs to maintain its process and service level advantages, allowing it to manufacture whatever the market demands. TSMC’s product portfolio is robust compared to most other semiconductor companies because it naturally adapts to technological and market-driven shifts. Instead of product-level risk, TSMC’s core risks are geopolitical.
In the past, I would have been more drawn to a company like Qualcomm given its clear technological lead in baseband modems, but if I’m honest with myself, I don’t know if their technologies will retain their dominance ten years from now. Qualcomm’s products express a relatively high degree of rigidity in a fast-changing industry, and this is something I prefer to avoid.
While robustness isn’t a guarantee of company survival, it acts as a natural buffer that insulates the companies we invest in against the unknown. The better we are at identifying robustness for our portfolio, the longer we also will endure.”
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Disclosure. None. 17 Best Augmented Reality Stocks To Invest In was initially published on Insider Monkey.
