3 Stocks to Buy to Invest in Virtual Reality

Virtual reality (VR) has become one of the biggest buzz phrases in the tech world. According to Grand View Research, the VR market was valued at $21.83 billion in 2021, and it’s expected to grow at a compound annual rate of 15% until at least 2030. As a result, some of the biggest names in tech are throwing their hats into the virtual ring.

Now might be a great time to invest in the leading VR companies. Here are three that are worth considering.

1. Meta Platforms

No company is investing more money into the growth of VR than Meta Platforms (META -0.26%). The company formerly known as Facebook has invested $36 billion into its metaverse-related efforts in just the last three years. However, its investment in the technology goes back to at least 2014, when it purchased a VR headset manufacturer Oculus for $2 billion.

Meta is going all in on its metaverse project, which it hopes will be the future of human communication, a la movies like Ready Player One. Meta got to where it is today by controlling communication portals Facebook, Instagram, and WhatsApp — three of the biggest communication tools on the internet. However, with the metaverse, the company aims to control the next internet itself. If everything goes according to Meta’s plan, it will own the platform that other companies build their portals on.

If Meta can achieve its goal, it will become one of the most valuable companies on the planet. However, that’s a pretty big “if,” and there’s a lot of risk involved in the company’s strategy and how much it is spending. In the time over which Meta has invested $36 billion in VR, its Reality Labs VR and metaverse division has reported just $5.3 billion in revenue. Hence why Meta’s stock price is currently at a seven-year low.

Meta is a risky investment, but it’s the biggest player in VR, and if any company can become the leader in the space in the years to come, it’s the one best positioned to do so.

2. Apple

If any company can give Meta Platforms a run for its money in VR, it’s it Apple (AAPL 0.42%). While it’s rarely the first tech company to enter a new product category, it has a knack for dominating the categories it enters when it finally does. It did so with the iPhone, iPad, Apple Watch, and AirPods — all of the product categories it has entered since 2007.

According to respected Apple supply chain analyst Ming-Chi Kuo, Apple could reveal its long-awaited VR/AR headset as soon as January. Although concrete information on what the headset will feature won’t be revealed until the official announcement, CEO Tim Cook recently teased that people will “wonder how you led your life without augmented reality.”

Apple’s AR/VR headset is expected to debut with a price of around $3,000, double what Meta is charging for its recently released Meta Quest Pro. As it improves its Augmented Reality OS and is able to bring down the hardware cost, reports say Apple will begin to offer a cheaper, mass-market version of the headset by 2025.

If VR and AR play as big of a role in our future daily lives as Meta and Apple believe they will, investing in Apple before the announcement of its headset could be like investing in Apple before the launch of the original iPhone.

3. Sony

While Apple and Meta vie for the future of human connectivity in VR, Sony (SONY 1.74%) is going for dominance in the already-popular VR gaming space. The PlayStation VR2 headset will be the only VR option in the $46.3 billion console gaming market when it launches in February. The other two major console manufacturers, Microsoft swear Nintendohave no VR offerings and aren’t rushing to develop them.

Sony’s PlayStation VR2 headset will be priced at $549 in the US, which puts it in between Valve‘s $999 Index VR Kit (which requires a separate gaming PC to use) and Meta’s $399 Quest 2 headset, which doesn’t require additional hardware but has limits regarding the games it can run.

To use the PlayStation VR2, gamers will also need a PS5. Those consoles go for either $399 or $499, but that still puts the whole package at a lower price than VR gaming on a PC and will give players a much higher quality experience than the stand-alone Meta Quest 2.

In the years since it was released in 2016, Sony has sold more than 5 million of the original PlayStation VRs. By contrast, Sony sold nearly 117 million PlayStation 4 consoles, so that headset clearly enjoyed only limited adoption by its target audience. However, the company has significantly improved its technology for the new model, so Sony is hoping to make a bigger splash this time around.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Meta Platforms, Inc. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

Leave a Reply

Your email address will not be published. Required fields are marked *