Virtual reality (VR) has appeared in dozens of devices over the last few decades. However, technological advances have only recently made it possible for companies to deliver what VR promised 30 years ago. As a result, more and more companies are joining the high-growth market.

According to Grand View Research, the VR market was valued at roughly $22 billion in 2021 and is projected to expand at a compound annual growth rate (CAGR) of 15% through 2030. As the industry develops, many VR companies are also exploring augmented reality (AR), which, according to Grand View Research, has a CAGR of 40.9% until at least 2030.For reference, VR creates a completely virtual world for the user, while AR alters aspects of the real world with an overlay of virtual details. 

Tech giants Sony and Meta Platforms have primarily dominated the VR industry with their headsets, but Advanced Micro Devices (AMD -1.16%) and Apple (AAPL 0.69%) could play significant roles in the market's future. As a result, now is an excellent time to consider investing in one of these future leaders of the industry.

Is AMD or Apple the better VR stock? Let's take a closer look.

Advanced Micro Devices is a leading chip supplier

AMD is best known for its role in PC components, having seen immense success with its consumer lines of graphics processing units (GPUs) and processors. However, the company has steadily become a leading name in semi-custom chips for a variety of devices. For instance, AMD exclusively supplies the graphics and processing power for Sony's PlayStation 5 (PS5) and Microsoft's Xbox Series X and S game consoles with its system on a chip (SoC).

The lucrative partnerships were the main driver of AMD's gaming segment growth in fiscal 2022, with revenue rising 21% year over year to $6.8 billion. Operating income rose 2% to $953 million. Any growth during the economically challenging year is impressive, considering the PC market experienced steep declines.

AMD's chip business has led it to play a crucial role in VR. Sony's PlayStation VR 2 headset was released in February and is run exclusively on AMD chips through the PS5. Meanwhile, the company's GPUs and processors have the power required to run headsets such as HTC's Vive, Microsoft's Windows Mixed Reality, and the Oculus Rift (now a product of Meta).

As the VR industry develops, more companies will likely turn to AMD for its chips. Meta's current line of Quest VR products uses mobile chips that are underpowered compared to a desktop PC. Future iterations of Quest headsets will likely switch over to the kind of SoCs that AMD produces in the coming years.

Apple has a talent for dominating new markets

Various acquisitions and patents over the years have all but confirmed Apple's planned venture into virtual reality. However, a ramp-up in reports over the last few months has suggested the company could debut its first headset in 2023.

In January, Bloomberg reported Apple's coming device would have VR and AR capabilities, featured alongside an iOS-like interface and eye/hand-tracking. Rumors have also revealed the headset will likely launch at a hefty price tag in the thousands, but get gradually cheaper with subsequent releases, in a similar pricing strategy to the Apple Watch.

While Apple does not currently have a strong position in VR, its past success in entering new markets makes its stock an attractive investment. The tech giant has a proven talent for venturing into new industries and quickly rising to dominance, as shown by its success in smartphones, tablets, Bluetooth headphones, and smartwatches. Each of these technologies had relatively low mass adoption before the release of Apple's versions, which then sent their usage skyrocketing.

As a result, the company holds a leading 24.1% market share in smartphones, a 49.2% share in tablets, a 34.4% share in headphones, and a 26% share in smartwatches. Apple's potent brand has garnered loyalty from consumers, which could significantly boost the future adoption of VR and AR.

AMD and Apple have vast potential in virtual reality, one with increasing demand for its chips and the other with its reputation for success in new markets. AMD's chips grant it a fairly solid position in the growing industry, with Apple's soon-to-be-launched headset likely to increase competition and demand for AMD's chips over the long term. As Apple's potential role in VR is still tentative, AMD's more concrete position makes it the better virtual reality stock and an excellent way to invest in the burgeoning market.