Tech stocks fell out of favor last year as an economic downturn caused steep declines in consumer spending. However, Wall Street has grown bullish about the industry again in 2023, with many companies' stocks on the rise. As a result, now is an excellent time to invest in an exciting growth area of tech like virtual reality (VR).
Data from The Insight Partners shows the VR market is projected to hit $442 billion by 2030, expanding at a compound annual growth rate of 29%. The technology has had trouble attracting mainstream audiences in the past, and has been primarily embraced by the video gaming community. However, major companies like Apple (AAPL 2.15%) and Meta Platforms are heavily investing in VR now, with hopes of convincing consumers across multiple industries to adopt the technology.
It's still early days in the VR market, presenting an exciting investment opportunity. The industry could have a lot to offer stockholders over the long term. So, here are two stocks to invest in virtual reality this month.
1. Advanced Micro Devices
Advanced Micro Devices (AMD 2.33%) has become a favorite with investors this year, with its stock up about 65% since Jan. 1. Wall Street has rallied over the company's potential in artificial intelligence (AI) as it gradually expands in the booming industry. However, AMD's chips can be applied to countless segments across tech and have already proven their worth in VR.
Until recently, the best VR experience could be achieved by connecting a headset to a gaming PC equipped with high-performance chips. In this way, AMD has successfully powered VR headsets such as the Meta Quest, Microsoft's Windows Mixed Reality, and HTC's Vive with its powerful central processing units (CPUs), graphics processing units (GPUs), and LiquidVR technology. AMD also indirectly powers Sony's PlayStation VR 2 by supplying the chips in the PlayStation 5, which is necessary to run the headset.
NASDAQ: AMD
Key Data Points
However, advances in chip technology are gradually allowing headsets to become all-in-one machines, freeing users from the constraints of being attached to a PC or console.
AMD has massive potential as the industry evolves, with its experience supplying custom chips to companies across tech. In addition to the PlayStation 5, AMD's hardware powers Microsoft's Xbox Series X|S, countless laptops, and handheld gaming machines.
AMD's chips could become a go-to for VR companies looking to take their headsets to the next level. For example, the Meta Quest Pro currently runs on Qualcomm's Snapdragon XR2 Plus Gen 1, a chip based on ones used in 2020 smartphones. The next version of Meta's VR headset will likely require more powerful hardware, with AMD well equipped to power the next generation of VR headsets.
AMD is no stranger to the VR market and could profit significantly as the market expands.
2. Apple
Apple is gearing up to make a big splash in VR in 2024 after unveiling its first virtual/augmented reality headset this past June, which it calls the Vision Pro. The device is expected to begin shipping early next year and, in true Apple form, could offer the industry a significant boost.
The company isn't always the first to a market, but it is known for taking existing technology and using its unique design language to attract millions of users. Apple has done this with smartphones, tablets, and smartwatches, achieving leading market shares. Each of these product categories experienced a rapid spike in public adoption once Apple entered the picture, which bodes well for its venture into VR/AR.
Apple's Vision Pro has seemingly taken leaps in innovation, offering many features never before seen in a headset. The device is equipped with the same chip powering the company's MacBook Air, essentially making it a full computer in headset form. As a result, the Vision Pro can perform almost any computing function that the average consumer requires, including web browsing, video streaming, FaceTime calls, editing, and word processing.
NASDAQ: AAPL
Key Data Points
With the Vision Pro, Apple seems to be employing a similar strategy that proved successful when launching its first smartwatch. The company is releasing its first headset jam-packed with features and applications, allowing consumers to decide its best use case. For the Apple Watch, that turned out to be fitness tracking. Only time will tell what the best use will be for the Vision Pro.
Prospective shareholders should be aware that Apple is a long-term VR stock. The Vision Pro will launch at $3,499, pricing out many consumers. However, future iterations of the device will likely see this cost come down, a strategy Apple has used with many of its previous products.
Regardless, the company's past success when entering new markets suggests an investment in its stock today could be an investment in the future leader of the lucrative industry.
