11 Best Augmented Reality Stocks to Invest In – Insider Monkey
In this article, we will look at 11 best augmented reality stocks to invest in. If you want to skip our detailed discussion about augmented reality and its use cases, you can go directly to 5 Best Augmented Reality Stocks to Invest In.
Augmented reality is one of the foundational technologies that will be powering the much-anticipated Metaverse. It only makes sense to keep up with technological innovations and invest in the next best thing. As of now, billions of dollars are being invested in the design, development, and integration of augmented reality not only because it is invaluable to the metaverse, but because augmented reality has applications in consumer, commercial, enterprise, healthcare, and defense among other industries across the world.
Augmented Reality Market
According to a report published by Markets and Markets, the global augmented reality market was worth $14.7 billion in 2020 and is projected to hit a valuation of $88.4 billion by 2026, growing at a CAGR of 31.5% from 2021 to 2026. Factors driving this growth include a rise in demand for AR devices and their applications in healthcare, retail, and the global automotive industry. Another factor is the rise in investments in AR technology, with companies like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Meta Platforms, Inc. (NASDAQ:FB) being the heaviest and most bullish investors in the space.
Use Cases of Augmented Reality
Augmented reality is currently making its way in industries and is transforming the way things work. Take automobiles for instance. Switzerland-based WayRay is a deep-tech company that transformed the automotive industry by offering a holographic device that makes your windshield “smart”. You can get directions and navigate your way without using your smartphone or any head/eye gear. E-commerce giant Amazon.com, Inc. (NASDAQ:AMZN) added AR functionalities to its platform, AR View, which enables users to visualize products before making a purchase. AccuVein, the company that pioneered vein-tracing in patients by leveraging augmented reality and computer vision, has brought about a transformative change in the healthcare sector.
To determine the best augmented reality stocks to invest in, we did a careful assessment of the companies most active in the space. By most active, we mean companies working on developing innovative AR solutions that are targeted to specific industries and also companies that are developing foundational technology for augmented reality such as chipsets and cameras.
We narrowed down our selection to augmented reality stocks that have positive analyst and investor sentiment. We derived the hedge fund sentiment for each stock using Insider Monkey’s database which tracks data of over 900 elite hedge funds as of the end of Q4 2021.
Best Augmented Reality Stocks to Invest In
11. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 28
Sony Group Corporation (NYSE:SONY) designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets worldwide. Its flagship AR product is the AR Glasses System, which is a wearable head-mounted see-through display that projects 3D images onto the real world. The system offers an immersive experience in which the user can interact with virtual sounds and images in real-time as if they exist as tangible entities.
Sony Group Corporation (NYSE:SONY) is ranked 11 among best augmented reality stocks to invest in as it is heavily involved in the industry and is sharing the market with tech giants such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Meta Platforms, Inc. (NASDAQ:FB).
As of December 31, 2021, GAMCO Investors is the top shareholder in Sony Group Corporation (NYSE:SONY). GAMCO Investors owns over 1.8 million shares of the stock which amounts to a stake value of $233.4 million.
Sony Group Corporation (NYSE:SONY) is rising in popularity among elite hedge funds. At the close of the fourth quarter of 2021, 28 hedge funds held stakes in the company which amounted to over $609 million. This is compared to 19 positions in the previous quarter with stakes worth roughly $388.8 million. The hedge fund sentiment for the stock is positive.
Cooper Investors mentioned Sony Group Corporation (NYSE:SONY) in its fourth-quarter 2021 investor letter. Here is what the investment management firm had to say:
“In recent years we have observed a growing market for music rights which represent another way for owners of record labels and music libraries like portfolio holdings Warner Music Group and Sony (via its subsidiary Sony Music, ~25% of our estimated enterprise value) to deploy capital, grow their businesses and create value for shareholders.
In the first few days of 2022 Warner closed a deal to acquire David Bowie’s back catalogue for about US$250m which follows on from Bruce Springsteen’s catalogue sale to Sony for upwards of US$500m and Bob Dylan’s sale to Universal Music for a similar amount.
The trend in demand for music copyrights is clearly strengthening, with competition for these assets coming from traditional music companies (Warner, Sony) as well as specialist investors and private equity…” (Click here to see the full text)
10. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 36
Unity Software Inc. (NYSE:U) offers industry-leading solutions to design and develop 3D content which can be rendered on smartphones, tablets, computers, consoles, and augmented and virtual reality devices. This February, the company reported quarterly revenues of $315 million, up 43.36% year over year from $220 million, and outperformed market consensus by $20.16 million.
On April 7, 2022, Citi analyst Jason Bazinet initiated coverage of Unity Software Inc. (NYSE:U) with a Buy rating and a $125 price target. The analyst maintains a positive outlook on the stock and sees the company grow annual revenues by 35% through 2024 as it expands into non-gaming verticals.
Unity Software Inc. (NYSE:U) is one of the best augmented reality stocks to invest in right now as the company has several competitive advantages over other major players. Its Unity game engine is the most widely used 3D platform to develop augmented and virtual reality projects for industries including gaming, animation, automotive, architecture, and more.
At the close of Q4 2021, Unity Software Inc. (NYSE:U) was a part of 36 hedge fund portfolios that held stakes of more than $7.43 billion in the company. Of these, Silver Lake Partners was the most prominent stakeholder, owning over 34.9 million shares of stock which amounted to a stake value of $5.0 billion.
9. Etsy, Inc. (NASDAQ:ETSY)
Number of Hedge Fund Holders: 47
Etsy, Inc. (NASDAQ:ETSY) operates two-sided online marketplaces that connect buyers and sellers primarily in the United States, the United Kingdom, Germany, Canada, Australia, France, and India. On February 24, 2022, the company reported earnings for the fourth quarter of 2021 in which it beat both EPS and revenue estimates. The company reported earnings per share of $1.43 and beat estimates by $0.45. Etsy, Inc. (NASDAQ:ETSY) generated revenues of $717.14 million, up 16.16% year over year, and beat revenue estimates by $31.69 million.
The company released an augmented reality tool back in 2020 which enabled consumers to visualize wall art featured on Etsy, Inc.’s (NASDAQ:ETSY) marketplace. The company is working on providing immersive AR experiences to shoppers and last September, it unveiled the Etsy House, a digital home decorated with items featured on its marketplace.
Etsy, Inc. (NASDAQ:ETSY) is leveraging augmented reality to boost user experience and in turn grow its business. The stock is among the top 10 augmented reality stocks to invest in. Moreover, this January, KeyBanc analyst Edward Yruma upgraded Etsy, Inc. (NASDAQ:ETSY) to Overweight from Sector Weight with a $200 price target.
Etsy, Inc. (NASDAQ:ETSY) is leveraging augmented reality to transform the landscape of the retail and e-commerce industry by helping consumers view niche products in their homes before making a purchase. Other lucrative augmented reality stocks to invest in include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Meta Platforms, Inc. (NASDAQ:FB).
Insider Monkey spotted Etsy, Inc. (NASDAQ:ETSY) on 47 hedge fund portfolios at the end of the fourth quarter of 2021. The total stakes of these hedge funds were worth roughly $1.29 billion. As of December 31, 2021, Two Sigma Advisors is the dominating shareholder having stakes of more than $318 million in the company.
“We took advantage of market volatility in the fourth quarter, using pullbacks to initiate eight new positions and add to recently established ones while closing another eight positions Seeding the Strategy with disruptive growth companies and broadening out the portfolio’s industry weightings have been central to our repositioning efforts in 2021. To this end, we added two new disruptors in the quarter: Etsy and CrowdStrike Holdings.
Etsy operates a number of online marketplaces with its flagship brand, Etsy.com, an e-commerce destination for craft and artisan goods. We see the company’s scaled, two-sided network and focus on unique and special goods as competitive advantages. We believe Etsy has a long runway for growth ahead as it captures a greater share of the very large and growing global retail market. We view Etsy as a differentiated, early stage way to participate in the secular growth of e-commerce. We are also attracted to the company’s capital light business model and strong and improving profitability profile. Furthermore, our position increases our exposure to the consumer discretionary sector, where we have historically had less exposure.”
8. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 52
Autodesk, Inc. (NASDAQ:ADSK) is one of the best augmented reality stocks to invest in as the company is actively working on expanding its current suite of products. On March 24, Autodesk, Inc. (NASDAQ:ADSK) announced its plans to acquire The Wild, an extended reality platform. The Wild offers architecture, engineering, and construction professionals to remotely present, collaborate and review projects in immersive virtual and augmented reality experiences. With this acquisition, Autodesk, Inc. (NASDAQ;ADSK) will be able to meet demands for augmented reality and virtual reality technology advancements within the architectural engineering industry.
This February, Citi analyst Tyler Radke reinstated coverage of Autodesk, Inc. (NASDAQ:ADSK) with a Buy rating and a $305 price target. The analyst is confident about the company’s growth potential over the next three years and maintains a “compelling” outlook on the stock.
According to Insider Monkey’s database, 52 hedge funds held stakes in Autodesk, Inc. (NASDAQ:ADSK) at the end of the fourth quarter of 2021. The value of these stakes amounted to roughly $1.74 billion. Of these, Impax Asset Management owned the most shares making it the largest stakeholder. As of December 31, 2021, Impax Asset Management has stakes of $321.5 million in the company.
“Shares of Autodesk have lagged recently due to expectations of short-term headwinds to free cash flow as the company transitions its billing structure to annual payments from multi-year up-front subscription payments. We view this as a transient issue and believe Autodesk’s attractive long-term growth profile remains in place.”
7. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 55
Snap Inc. (NYSE:SNAP) is best known for its camera application Snapchat which is one of the most widely used social media applications in the world. As of 2022, Snapchat has over 293 million daily active users who transact over 4 billion snaps per day. Among the company’s AR products we also have Spectacles, an eyewear product that connects with Snapchat and captures photos and video from a human perspective.
This March, Snap Inc. (NYSE:SNAP) announced that it has acquired NextMind, a Paris-based neurotech company. NextMind will be working with Snap Inc. (NYSE:SNAP) to advance long-term augmented reality research efforts within Snap Lab, which is Snap Inc.’s (NYSE:SNAP) hardware team focused on building cutting-edge devices for the company’s augmented reality platform.
On March 10, Deutsche Bank analyst Benjamin Black initiated coverage of Snap Inc. (NYSE:SNAP) with a Buy rating and $45 price target. The analyst sees a favorable risk/reward ratio for the stock noting near, medium, and longer-term upside drivers that are being neglected in Wall Street estimates.
At the close of the fourth quarter of 2021, 55 hedge funds were bullish on Snap Inc. (NYSE:SNAP). The total stakes of these funds exceeded $4.15 billion. Lone Pine Capital is the largest stakeholder in the company, having stakes of more than $1.57 billion in Snap Inc. (NYSE:SNAP) as of the end of last December. The investment covers 6.45% of Lone Pine Capital’s investment portfolio.
Like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Meta Platforms, Inc. (NASDAQ:FB), Snap Inc. (NYSE:SNAP) is one of the best augmented reality stocks to invest in for 2022.
Baron Funds mentioned Snap Inc. (NYSE:SNAP) in its fourth-quarter 2021 investor letter. Here is what the firm had to say:
“Snap Inc. is the leading social network among teens and young adults in North America and a growing number of overseas markets, including Western Europe and India. Shares fell this quarter on a greater-thananticipated impact from Apple’s new privacy changes for iOS mobile devices. These changes made it more difficult for Snapchat to measure the effectiveness of ads shown on its platform. We believe this is a near-term, industry-wide issue for which Snap is already developing a solution. Longer term, we continue to view Snap favorably as the company sustains its rapid pace of product innovation and expands its premium partnerships with advertisers.”
6. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 75
This April it was announced that Meta Platforms, Inc. (NASDAQ:FB) will be powering its smart glasses using chips designed by QUALCOMM, Incorporated (NASDAQ:QCOM). The company is working in computer vision, machine learning, and 5G technologies to revolutionize the tech industry. QUALCOMM, Incorporated (NASDAQ:QCOM) offers Snapdragon Spaces, its extended reality (XR) development platform which enables the creation of immersive 3D experiences for augmented reality hardware.
This February, QUALCOMM, Incorporated (NASDAQ:QCOM) released its earnings report for the fiscal first quarter of 2022. The company reported earnings per share of $3.23, beating estimates by $0.45. Moreover, the company generated revenues of $10.7 billion, up 30.04% year over year, and outperformed market consensus by more than $262 million.
On February 3, Bernstein analyst Stacy Rasgon raised her price target on QUALCOMM, Incorporated (NASDAQ:QCOM) to $250 from $225 and reiterated an Outperform rating on the shares, following the company’s “strong” earnings for the first quarter of 2022.
By the end of the fourth quarter of 2021, 75 hedge funds held stakes in QUALCOMM, Incorporated (NASDAQ:QCOM) that were worth more than $4.80 billion. This is compared to 70 positions in the preceding quarter with stakes worth roughly $3.51 billion. The hedge fund sentiment for the stock is positive.
As of December 31, 2021, Alkeon Capital Management is the most prominent stakeholder in QUALCOMM, Incorporated (NASDAQ:QCOM). According to Insider Monkey’s data, the fund’s stakes in the company were worth roughly $970.12 million which covered 1.79% of its investment portfolio.
ClearBridge Investments published its “Large Cap Value Strategy” fourth-quarter 2021 investor letter in which it mentioned QUALCOMM, Incorporated (NASDAQ:QCOM). Here is what experts at ClearBridge had to say:
“Market strength continued in the fourth quarter, with only the communication services sector down in the Russell 1000 Value Index. Portfolio returns benefited from the strong performance of semiconductor maker Qualcomm, which has executed exceptionally well in pursuing the transition to 5G, growing both content and share due to its leadership position in cellular technology. The chipmaker recently outlined a number of peripheral growth opportunities outside of mobile markets, including automotive (where it hopes to leverage its strong presence in the automotive infotainment space into advanced driver assistance systems), Internet of Things (including opportunities in the PC market, VR/AR market, and factory automation) and radio frequency (where mmWave adoption globally, including China, would drive substantial upside).”
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Disclosure: None. 11 Best Augmented Reality Stocks to Invest In is originally published on Insider Monkey.
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