3 actions to invest in virtual reality
At a time when investors are quite skeptical of tech stocks, now may seem like a strange time to jump in. virtual reality (RSV).
But the sheer size of the virtual reality market (which includes related augmented and mixed reality) will be worth an estimated $252 billion by 2028, up from just $28 billion in 2021.
That market opportunity is too big to ignore, and there are some big companies investing in hardware and software to make it happen. this is why Apple (AAPL) -1.46%), Alphabet (GOOG) -0.37%) (GOOGL) -0.66%)Y nvidia (NVDA -2.25%) They have great VR potential.
A new Apple headset could soon be a reality
The iPhone maker has long been rumored to be working on a mixed reality headset (some virtual reality and augmented reality capabilities) that could debut as soon as next year.
Noted Apple analyst Ming-Chi Kuo believes the company will launch its mixed reality headset in 2023 and could ship 1.5 million units in the first year.
While the timing is still uncertain, some ideas have already been known, including that the company has already shown off the device to its board members (an indication of its potential for a launch soon).
The company is also reportedly creating a dedicated operating system for the headphones, called xrOS, and will launch a separate app store, according to a recent Bloomberg report.
Apple could profit from the headphones not only through device sales (the headphones are rumored to sell for around $2,000) but also through in-app sales.
While investors will have to wait a bit longer for Apple’s headphones, the company’s stock is a good deal. now. Apple shares are trading at 24 times the company’s earnings, compared with a price-benefit (P/E ratio) of about 32 at this time last year.
Alphabet’s mobile domain could be translated into virtual reality
Alphabet’s Google has the most VR experience of any company on this list. The company released its ill-fated Google Glass augmented reality headset in 2013 (it’s still around in company form), and, until last year, had a basic VR headset called the Google Cardboard.
So what is Google working on now? Some Google insiders reportedly spoke to The Verge earlier this year and spilled some of the VR beans, saying the company is working on a new AR device that could launch as early as 2024.
The company had at least 300 employees working on the secret project at the time and was hiring people to create an operating system specifically for the device, dubbed Project Iris.
While the device is not yet available, investors should consider the potential of the world’s largest mobile software maker launching a VR/AR headset.
Google has already shown that it can make high-quality devices (its Pixel phones have top-tier hardware and software) and with so many of its competitors looking to enter the VR/AR space, Google could use its software prowess to challenge them in this one. space.
In addition to its VR potential, Alphabet is also looking more attractive right now, with the company’s P/E ratio sitting at 19 right now, down from a price-earnings ratio of about 28 this time. last year.
Nvidia chips could power the future of virtual reality
While Apple and Google are betting on gadgets and software in the VR space, Nvidia has a unique opportunity with its graphics processors.
The company is already a leader in the GPU market, and the company’s high-end graphics processors, used for everything from gaming to artificial intelligence, are a logical choice for creating virtual worlds.
Nvidia has already created developer tools and applications to help businesses and individuals take advantage of enterprise GPUs for construction of virtual worlds.
Most recently, the company launched Omniverse Cloud, which it defines as a “set of cloud services for artists, developers, and enterprise teams to design, publish, operate, and experiment metaverse applications.”
An estimate of the market size for AR/VR chips by Emergen Research said it could reach $19.3 billion by 2030, up from less than $3 billion last year.
With Nvidia shares trading at around 76 times the company’s earnings, tech stocks aren’t cheap. But Nvidia’s strong position in gaming, its leading GPU technology and its commitment to releasing VR tools for developers give Nvidia’s stock great potential in the growing VR market.
Virtual reality is still just around the corner
The virtual reality market is still taking shape, which means investors will need to be patient as this market grows.
But right now there’s a shift going on among many tech companies towards virtual reality, and it could eventually become an important segment for each of these companies.
For example, the market for virtual reality headsets that Apple is pursuing is poised to grow from fewer than 15 million headset shipments this year to nearly 35 million in 2026.
In addition, Apple and Google’s search for virtual reality software could help each of the companies expand their revenue from services through in-app purchases. And for Nvidia, virtual reality will allow the company to sell chips in a whole new space, even for the metaverse.
The sheer size of the VR market is a good indicator that VR will be big enough to help move the needle on these stocks, but investors will likely have to wait for VR to take shape over the next few years. next two years before you see the benefits.