Benefits and risks of investing in augmented reality stocks
Augmented reality has both benefits and risks that investors should consider before buying stocks focused on the sector. Some of the pros of investing in augmented reality stocks include:
- Growth potential: AR has the potential to be a large and growing market.
- Enhances other technologies: Increased AR usage could drive additional growth for technologies such as video games, smart glasses, and e-commerce.
- Exposure to other trends: Most leading AR companies also offer exposure to major tech growth trends, such as cloud computing and AI.
On the other hand, there are some cons to investing in AR stocks:
- Few pure plays: Most of the early AR leaders are large technology companies with diversified businesses. As a result, there are limited AR investment opportunities.
- A smaller market opportunity: While AR is a potentially multi-billion-dollar market, it's not as large as other major tech megatrends, such as cybersecurity, cloud computing, and AI.
- Product flops: Tech companies have a spotty track record of launching AR products, with several flopping.
Methodology: How these stocks were chosen
There aren't any pure-play augmented reality stocks. As a result, I had to look more broadly at technology companies investing in AR. This group stood out as the best way for investors to gain some exposure to AR.
Should you invest in augmented reality stocks?
AR is increasingly becoming a vital part of our lives. It's helping to revolutionize retail by increasing consumer purchase intent and giving buyers the confidence to pay more for a product when they can view it in AR. Meanwhile, AI-driven AR solutions are making the technology even more immersive and accessible, further increasing engagement and conversion for companies that use it. That makes it a potentially compelling investment opportunity.
However, it's a smaller market opportunity compared to other major tech trends, and there aren't any pure-play augmented reality stocks. Given these factors, investors might consider buying a basket of AR companies to gain exposure to this trend.