The concept of virtual reality (VR) has been around for decades, showing up in various devices throughout the years. However, the technology has only recently begun delivering on promises made 30-plus years ago. The potential for VR is rapidly growing, expanding from gaming to education, healthcare, business collaboration, design, and more.
According to Grand View Research, the VR market was worth $21.83 billion in 2021 and will grow at a compound annual growth rate (CAGR) of 15% until at least 2030. As a result, now is an excellent time to invest in the burgeoning industry.
Here are two VR stocks you won't want to miss.
1. Apple
Numerous reports have revealed that Apple (AAPL 2.60%) is hard at work on a VR/augmented reality (AR) headset that could release as early as 2023. Patent filings and multiple acquisitions over the years of VR and AR companies have also all but confirmed that the company has plans to move into the industry.
Apple's headset will likely compete with the Meta Quest Pro VR headset and Sony's PlayStation VR2, due to launch in February. However, Apple's device seems unique in that it is also expected to offer AR features. This is promising as the AR market was worth $25.33 billion in 2021 and is expected to see a CAGR of 40.9% until 2030.
Additionally, similar to the Meta Quest Pro, Apple's headset will not solely focus on games but perhaps offer advanced ways to work, create, and collaborate.
NASDAQ: AAPL
Key Data Points
While existing competition might seemingly put Apple at a disadvantage, the company's past displayed the exact opposite. The iPhone maker has proven talent for entering new markets, quickly gaining market share and growing into a dominating position. Apple has done this with smartphones, tablets, Bluetooth headphones, and smartwatches. Each of these technologies was catapulted into mainstream use after Apple launched its custom-designed versions, suggesting the company could do the same for virtual reality.
Apple's stock is a no-brainer investment with its highly profitable iPhone business, a booming services segment, and planned venture into VR. If the past is anything to go by, investing in Apple could be an investment in the future leader of the industry.
2. Nvidia
While investing in a VR headset manufacturer is a great idea, it's also wise to consider buying stock in the companies responsible for the components powering those devices. Nvidia (NVDA 1.07%) is a leader in graphics cards (GPUs), powering gaming PCs worldwide and consoles such as the Nintendo Switch with its system on a chip.
With companies such as Meta and Apple looking for real-world applications for virtual reality beyond gaming, GPU designers like Nvidia will be crucial in making it possible. According to Nvidia, VR is one of the most "demanding PC applications," with its high display resolutions (in 4K and above), but also a minimum refresh rate of 90Hz and "razor-thin latency tolerances." However, the company promises its high-end GeForce RTX GPUs are up to the task. Nvidia also created a software developer kit called VRWorks that enables application and headset developers to deliver VR experiences with its chips.
NASDAQ: NVDA
Key Data Points
Moreover, Nvidia is no stranger to partnering with the biggest names in tech to get its products out into the wild. In addition to a partnership with Nintendo, the company recently announced a collaboration with Microsoft to build a massive AI supercomputer where its GPUs will be used alongside the cloud computing platform Azure. There's no reason why Nvidia's technology will not soon be powering VR headsets as the industry expands.
Nvidia had a tough 2022, with its shares plunging 51% year over year as a decline in the consumer GPU market concerned investors. However, the company is also home to a booming data center business, a lucrative console partnership with Nintendo, and a promising collaboration with Microsoft.
Along with its potential role in VR, Nvidia is an excellent pick if you're looking to add a virtual reality stock to your portfolio.
