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5 Stocks to Watch on Booming Augmented Reality Adoption

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Augmented Reality (AR) is witnessing rapid adoption owing to its numerous end-user applications and a radical shift in consumer preferences. Major sectors including consumer, healthcare, e-commerce, gaming, entertainment, automotive, construction, tourism and education are using the technology to interact between the real world and 3D virtual objects in real time.

AR technology has become increasingly useful in the coronavirus-stricken world. The rising demand for remote assistance and collaboration with enterprises that assist in workflow management and optimization is expected to propel market growth.

Notably, various brands, retailers and companies have begun releasing VR and AR technologies to enable consumers to preview products before purchasing them.

The use of AR modeling and 3D visualization in surgeries, AR-powered head-up displays in vehicles, AR solutions in 360-degree visualization of hotel rooms and tourist destinations, photorealistic AR in smartphones, and 3D AR modeling in education among others remain noteworthy.

Moreover, the amalgamation of AR with Virtual Reality (VR) is increasing the number of use cases of the underlined technology.

The global augmented reality market size was valued at $17.67 billion in 2020. It is expected to expand at a CAGR of 43.8% from 2021 to 2028, per Grand View Research report.

Further, an IDC report indicates that worldwide spending on AR/VR products and services is anticipated to see a CAGR of 54% between 2020 and 2024.

This remains alluring for tech companies like Apple AAPL, Alphabet GOOGL, Facebook FB, Microsoft MSFT and Snap SNAP, which are making concerted efforts to rapidly penetrate the booming AR space.

Year to Date Performance

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AR Technology Adoption Among Tech Bigwigs

Apple is working on the release of its AR headset and AR glasses to strengthen its presence in the AR market. It is reportedly working on two AR projects to introduce these devices.

Noted Apple analyst Ming-Chi Kuo is predicting that Apple’s Augmented Reality headset will launch in the second quarter of 2022. This is expected to be a development tool and stepping stone toward Apple Glasses.

Additionally, Apple’s ARKit 4.0, the latest version of its open-source augmented reality development tools, is gaining popularity. Some of the newest advances related to ARKit 4.0 include location anchors, new depth API, and improved face tracking. This allows Apple’s ARKit developers to tap into the power of the latest iPhones’ LiDAR hardware.

Moreover, with ARKit 4.0, Apple introduced a powerful tool for outdoor AR navigation called Geo Tracking, which utilizes street view to ensure the best positioning.

Further, this Zacks Rank #2 (Buy) company’s acquisition strategy remains noteworthy in the AR space. The acquisition of NextVR, which offers live VR video content, bodes well for Apple. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alphabet owned Google’s ARCore is innovating with the introduction of publicly-made Street View photos. As long as an Android user has an ARCore-capable smartphone, Google will accept submissions for Street View photos.

Additionally, Google’s AR Live View walking directions for Google Maps has introduced new features to improve the AR Live View experience outdoors including the ability to overlay landmarks and an expansion of Live View to more cities.

Moreover, the Google Glass vision is the most-used AR capability of the search giant in the multi trillion healthcare industry. Notably, Google Glass vision automatically displays up-to-date patient data, which remains crucial in surgical procedures.

Apart from this, this Zack Rank #3 (Hold) company integrated AR skills into Google Shopping, which is another positive. Also, the availability of 3D and AR features in all languages in Google Search delivers enhanced search results. Additionally, the company’s strong efforts to provide AR experience in gaming remain tailwinds.

Microsoft has the potential to rival Google on the back of its Hololens — based on mixed reality — that is a combination of AR/VR technology.

This Zacks Rank #3 company has won a contract from the U.S. Army to build more than custom HoloLens augmented reality headsets. The contract for over 120,000 headsets could be worth up to $21.88 billion over 10 years.

Moreover, Microsoft is also riding on the expanding portfolio of AR glasses, which comprises HoloLens and HoloLens 2. HoloLens is known to enable surgeons to view CT and MRI imaging of the patient in 3D during the operation.

Facebook is working on an all-day AR wearable expected for release between 2023 and 2025.

The company is gearing up to launch its first pair of smart glasses in 2021, backed by AR technology. The company partnered with the maker of Ray-Ban called Luxottica for this purpose.

Facebook’s ongoing research efforts and demonstrated success with Oculus Quest make the social networking giant one of the companies best-positioned to make consumer-ready AR glasses a reality.

Recently, Facebook announced the availability of Shops to WhatsApp and Marketplace. Moreover, shopping will be powered by new technologies like Instagram visual search and AR Dynamic Ads.

Additionally, Facebook is introducing tools for brands to include AR product catalogs in ads that will automatically show relevant products to people based on their interests.

Moreover, this Zacks Rank #3 company’s tie-up with Plessey Semiconductors bodes well for its growing AR initiatives. Facebook’s prototype will be leveraging Plessey’s LED manufacturing operations to create technologies for potential use in the AR/VR space.

Snapchat’s parent, Snap is a dominant name in the AR-supported advertising market, based on its sponsored lenses and filters.

At the end of 2020, Snap launched its first-ever 5G-enabled Landmarker Lens (a new tool for overlaying AR on the world) in partnership with Verizon. The Lens uses the company’s augmented reality technology and Verizon’s 5G Ultra Wideband capabilities.

Markedly, over 200 million daily active users engage with augmented reality every day on average. As of the end of fourth-quarter 2020, over 1.5 million augmented Lenses were created by the Snapchat community through Lens Studio.

Solid adoption of products like Scan and AR Bar is driving the usage of AR-based lenses, providing significant growth opportunities to this Zacks Rank #3 company. Moreover, the launch of Local Lenses, which enables shared and persistent AR experiences in much larger areas around the world, is expected to aid user engagement.

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