Top 16 Augmented Reality (AR) Stocks Among Hedge Funds
In this article, we will take a look at the top 16 augmented reality (AR) stocks among hedge funds. To see more such companies, go directly to Top 5 Augmented Reality (AR) Stocks Among Hedge Funds.
The augmented reality market has promising growth prospects given the tech industry’s massive shift towards immersive reality, metaverse, Internet of Things and AI. A Mordor Intelligence report estimates that the overall size of the augmented reality market was expected to grow from $29.84 billion in 2023 to $174.47 billion by 2028. This would be a CAGR of 42.36%.
While AI takes all the media hype, major companies are continuously launching new AR/VR products that are changing the way we interact with the physical world. For example, earlier this year, Google launched Geospatial Creator, a set of tools powered by ARCore and Google Maps Platform. The tools will allow developers to build and “scale AR immersive experiences easily and accurately using various technologies, such as Photorealistic 3D Tiles, Rooftop anchors, Streetscape Geometry, and Scene Semantics.”
Apple earlier this year upped the ante in the AR/VR race by revealing its Vision Pro headset, which would have a hefty price tag of $3,499. The mixed-reality headset is scheduled for release in early 2024.
Many other companies are jumping in the race to compete with bigger companies. The company behind Pokemon Go, Ninantic, is making its own “visual positioning system” (VPS) to compete with Google.
In this backdrop it'd be interesting to see which augmented reality stocks smart money investors are piling into. For this article we scanned Insider Monkey's database of 910 hedge funds and picked 16 augmented reality stocks with the highest number of hedge fund investors.
Photo by David Grandmougin on Unsplash
Top 16 Augmented Reality (AR) Stocks Among Hedge Funds
16. Vuzix Corporation (NASDAQ:VUZI)
Number of Hedge Fund Holders: 7
Vuzix Corporation (NASDAQ:VUZI) sells wearable display technology and augmented reality products. Vuzix Corporation (NASDAQ:VUZI) is down about 40% over the past one year. In August Vuzix Corporation (NASDAQ:VUZI) posted strong Q2 results. GAAP EPS in the quarter came in at -$0.14 beating estimates by $0.03. Revenue in the quarter jumped about 56.3% year over year to $4.69 million, beating estimates by $0.42 million.
Out of the 910 hedge funds tracked by Insider Monkey, 7 hedge funds tracked by Insider Monkey reported owning stakes in Vuzix Corporation (NASDAQ:VUZI). The most significant stakeholder of Vuzix Corporation (NASDAQ:VUZI) was ARK Investment Management of Catherine D. Wood which owns a $33 million stake in the company.
15. Immersion Corporation (NASDAQ:IMMR)
Number of Hedge Fund Holders: 14
California-based Immersion Corporation (NASDAQ:IMMR) makes haptic technology that is used in AR and VR devices. As of the end of the second quarter of 2023, 14 hedge funds out of the 910 funds tracked by Insider Monkey reported owning stakes in Immersion Corporation (NASDAQ:IMMR). The biggest stakeholder of Immersion Corporation (NASDAQ:IMMR) during this period was Chuck Royce’s Royce & Associates which owns a $7.4 million stake in the company.
Immersion Corporation (NASDAQ:IMMR) is also a dividend-paying stock. Earlier in September Immersion Corporation (NASDAQ:IMMR) declared a dividend of $0.03 per share, in-line with the previous dividend. The dividend is payable on October 27 for shareholders of record as of October 16.
14. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 29
Snap is one of the most notable AR companies in the world. The company offers AR lenses and spectacles, along with several filters and in-app AR features. Earlier this year Snap introduced ray tracing technology to its AR Lens Studio for developers. The company said this technology will allow realistic renderings of light and shine on AR artifacts.
Here is what RiverPark Large Growth Fund has to say about Snap Inc. (NYSE:SNAP) in its Q3 2022 investor letter:
“SNAP shares were our top detractor for the quarter on its July decline from weaker revenue growth relative to guidance (which had been reduced in May) and the fact that management did not provide an outlook for 3Q. Shares subsequently rebounded somewhat as the company announced better-than-expected near-term revenue growth, while announcing a broadbased cost restructuring.
Although the company continues to face near-term macro headwinds and difficult year-over-year comparisons from COVID-fueled quarters last year, we believe SNAP can reaccelerate its revenue growth to greater than 20% annually over the next several years. With TTM revenue of $4.5 billion (as compared with Meta’s $120 billion), 347 million daily average users (about 1/10 of Meta’s), and $14 TTM ARPU (about 1/3 of Meta’s), we believe SNAP has a long runway for both revenue growth and expanded profitability as it improves its platform functionality, continues to grow its audience (daily active users continue to grow at a double-digit rate), and expands its monetization.”
13. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 30
Gaming company Unity software stands to benefit from the AR revolution as more and more companies hire AR and VR experts to develop immersive reality games.
As of the end of the second quarter of 2023, 30 hedge funds tracked by Insider Monkey reported having stakes in the company.
12. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 31
Sony Group Corporation (NYSE:SONY) shares have gained about 25% over the past one year. Sony Group Corporation (NYSE:SONY) sells OLED Micro-display products that are used in immersive products like VR and AR headsets and glasses. Sony Group Corporation (NYSE:SONY) also sells controllers for haptic feedback and immersive experiences for games, virtual reality and other applications.
A total of 31 hedge funds out of the 910 funds tracked by Insider Monkey reported owning stakes in Sony Group Corporation (NYSE:SONY) as of the end of the second quarter. The most significant stakeholder of Sony Group Corporation (NYSE:SONY) was Mario Gabelli’s GAMCO Investors which owns a $138 million stake in the company.
Aristotle Capital made the following comment about Sony Group Corporation (NYSE:SONY) in its Q3 2022 investor letter:
“Sony Group Corporation (NYSE:SONY), the global provider of video games and consoles, image sensors, and music, as well as movies, was a major detractor for the period. The share price of the company has struggled this year following its strong performance in 2021. Signs of a slowdown in the gaming industry (as people seem inclined to take on outdoor activities as pandemic fears have subsided), combined with sales of its PlayStation 5 that have been held up by a global parts shortage, have led to gaming‐related software sales falling more than 20% year‐over‐year. Rather than focusing on short‐term demand dislocations, we focus on the company’s ability to continue migrating videogame users toward the firm’s subscription offerings, as well as its capacity to leverage content across its video, music and gaming platforms. We are also impressed with the expansion of Sony’s Music segment, which has been supported by the pervasiveness of streaming services. Management’s ongoing work to improve the company’s TV and film studios is bearing fruit as well, with sales growing 67% year‐over‐year for its Pictures segment as its regional strategy has taken hold, including recent progress made toward solidifying a merger plan with India‐based Zee Entertainment. All of this is to say we remain excited by the oligopolistic nature of the businesses Sony operates in, and the future prospects for the company given its leadership in image sensors, music publishing and gaming consoles.”
11. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 35
Online gaming platform Roblox allows gamers and developers build virtual worlds. The company could gain on the back of the upcoming VR revolution. The stock is currently in the spotlight after SoMA Partners’ Gil Simon said in an interview with CNBC that Roblox stock could double.
"We think the next few years is a nice trajectory for them to increase those margins by as much as 300 basis points a year. We think next year will be an up year, this year will be the trough and we are looking out to 2025 and 2026 and we think those margins could be back into the 20s,” Simon said.
Artisan Mid Cap Fund made the following comment about Roblox Corporation (NYSE:RBLX) in its second quarter 2023 investor letter:
“We initiated new GardenSM positions in Keysight, Roblox and Liberty Media Corp–Liberty Formula One during the quarter. Roblox Corporation (NYSE:RBLX) is an online platform that allows users to play games created by other users and to create their own games using the Roblox Studio, a robust suite of development and coding tools. The company’s model is similar to a social network in that user-generated content scales with user growth on the platform and benefits from viral adoption. While the graphics, user interface and general gameplay currently appeal more to younger people, Roblox is pursuing a strategy of investing heavily to accelerate its technological capabilities so that it can provide experiences that appeal to an older demographic. We believe the valuation is justifiable given the stickiness of the core platform (the average user spends 2.4 hours per day on Roblox), its attractive business model and a potential bull case where Roblox becomes a leading place to create and consume social 3D experiences for the general population.
Roblox is another (there are more) example of a company that is well-positioned to benefit from generative AI advancements. As discussed earlier, Roblox is a social gaming platform that relies on user-generated content. This content is enabled by the platform’s robustyet-simple tools for relatively novice developers. AI has the potential to turbocharge this tool set—with AI-assisted code building and generative artwork creation. Over time, this should enable a deeper pool of user-generated content that attracts an expanding set of game players.”
10. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 56
Texas Instruments Incorporated (NASDAQ:TXN) is one of the companies that would gain both directly and indirectly from the AR market. Texas Instruments Incorporated (NASDAQ:TXN) sells technologies that are used in augmented reality systems. For example, Texas Instruments Incorporated (NASDAQ:TXN)’ TI DLP® Pico technology enables small, high-performance, low power AR display modules.
As of the end of the second quarter of 2023, 56 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported owning stakes in Texas Instruments Incorporated (NASDAQ:TXN). The most significant stakeholder of Texas Instruments Incorporated (NASDAQ:TXN) was David Blood and Al Gore’s Generation Investment Management which owns a $777 million stake in the company.
9. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 58
Gaming company Take Two is expected to gain from the rise of AR games. The company is expected to roll out next-gen games in the coming months and weeks that will have immersive reality features.
Diamond Hill All Cap Select Strategy made the following comment about Take-Two Interactive Software, Inc. (NASDAQ:TTWO) in its Q4 2022 investor letter:
“Video game developer Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has faced weakness in the mobile gaming market, in addition to game-launching delays. The company reported underwhelming quarterly results in Q4 and lowered its full-year guidance. After reexamining our long-term thesis, we decided to exit our position in favor of more attractive opportunities.”
8. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
Technologies, platforms and products made by QUALCOMM Incorporated (NASDAQ:QCOM) play a key role in enabling companies in developing next-generation AR systems. QUALCOMM Incorporated (NASDAQ:QCOM)’s strengths in the 5G domain will also help it engage in the immersive, 5G-powered world of tomorrow. Qualcomm’s Snapdragon® augmented reality technology can power smart glasses and many other AR devices. Recently, QUALCOMM Incorporated (NASDAQ:QCOM) signed a non-binding memorandum of understanding with Baidu to cooperate on extended reality, or XR, technology and jointly create a new platform for metaverse and compatible services.
As of the end of the second quarter of 2023, 73 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in QUALCOMM Incorporated (NASDAQ:QCOM).
7. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 109
Adobe Inc. (NASDAQ:ADBE) is one of the companies that will benefit from the AR revolution because of its software products. Adobe Aero is a software platform that allows developers to build different AR and VR applications. Adobe Inc. (NASDAQ:ADBE)’s research team is also working to develop various AR and VR photography tools and technologies.
One of the biggest growth catalysts for Adobe Inc. (NASDAQ:ADBE) could be AI. Recently, Goldman Sachs reiterated its Buy rating on Adobe Inc. (NASDAQ:ADBE) and upped its price target on the stock to $625 from $550, citing growth opportunities from generative AI.
Harding Loevner Global Equity Strategy made the following comment about Adobe Inc. (NASDAQ:ADBE) in its Q2 2023 investor letter:
“Although the market initially feared that Adobe Inc. (NASDAQ:ADBE) would lose out to Al image-generating programs Dall-E, Midjourney, and Stable Diffusion, the design-software giant has since released its own generative Al model called Firefly. One feature of Firefly is that it can help designers generate ideas and create and manipulate images more quickly in Photoshop or Illustrator that can then be processed by other Adobe products for further development, fostering a seamless workflow. There’s more work involved when trying to manipulate images created by outside tools. Also, because Firefly is trained on Adobe’s vast inventory of stock images and other licensed content, it can generate professional-quality, commercially viable results, further setting it apart from generic models that are often trained on copyrighted content that isn’t properly licensed. These are just two examples of how Al enhances the Adobe suite, which should allow the company to raise subscription prices and upsell users.”
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 112
Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks 6th in our list of the best augmented reality stocks to buy now according to hedge funds. American augmented reality company Magic Leap in 2021 said it would partner with Advanced Micro Devices, Inc. (NASDAQ:AMD) to produce an augmented reality (AR) solution with a semi-custom system-on-a-chip (SoC). Advanced Micro Devices, Inc. (NASDAQ:AMD) is in a position to make chips that will be used in AR and VR systems developed by companies all over the world.
A total of 112 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported owning stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD). The most significant stakeholder of Advanced Micro Devices, Inc. (NASDAQ:AMD) during this period was Philippe Laffont’s Coatue Management which owns a $1.6 billion stake in the company.
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Disclosure: None. 16 Augmented Reality (AR) Stocks Among Hedge Funds is originally published on Insider Monkey.
