Though once a niche investment category, virtual reality stocks to buy have blossomed in recent years. Fundamentally, that’s mainly due to significant advances in technology. With immersive graphics blurring the line between the virtual and the real, the VR space offers serious upside potential.
According to Grand View Research, the global VR market size reached a valuation of $28.41 billion in 2022. Further, experts project that the industry will expand at a compound annual growth rate (CAGR) of 13.8% from 2023 to 2030. By the culmination of the forecasted period, the segment should print revenue of $87 billion. That’s a great starting point for VR stocks. Plus, with the tech fallout of 2022, several VR enterprises sit on a relative discount. If you’re the intrepid type, these are the immersive technology stocks to consider.
| NVDA | Nvidia | $277.49 |
| META | Meta Platforms | $240.32 |
| GOOG GOOGL | Alphabet | $108.22 |
| ADSK | Autodesk | $194.79 |
| U | Unity Software | $26.97 |
| IMMR | Immersion | $6.59 |
| VUZI | Vuzix | $4.02 |
Nvidia (NVDA)
Generating fame for its graphics processing units (GPUs), tech specialist Nvidia (NASDAQ:NVDA) also ranks among the top virtual reality stocks to buy. For one thing, Nvidia designed its ultra-powerful GeForce RTX GPU specifically for VR applications. As well, its processors support the rigorous requirements of augmented reality protocols that have become increasingly commonplace.
Since the January opener, NVDA gained over 90% of its equity value, a remarkable statistic. Also, in the trailing one-year period, it moved up nearly 38%. Financially, Nvidia benefits from excellent stability, as evidenced by its stratospheric Altman Z-Score of 22.77. Basically, we’re talking about a highly resilient enterprise with an extremely low risk of bankruptcy.
Operationally, Nvidia posted a three-year revenue growth rate of 34.5%, beating out 87.59% of other semiconductor firms. Also, its net margin comes in at 16.19%, better than 70.2% of sector players. You’re not going to find too many augmented reality stocks that can beat those stats. Finally, analysts peg NVDA as a consensus strong buy. Admittedly, though, their average price target of $286.94 implies upside of 5%. That said, the most optimistic target calls for $355 per share.
Meta Platforms (META)
Owning the biggest social media network in the world, Meta Platforms (NASDAQ:META) would like to be known for more than its Facebook platform. Management seeks new life in its second act by becoming a top player among virtual reality stocks to buy. Specifically, Meta recently launched its Meta Quest 2 VR headset, which should take immersive experiences to another level. Also, it features other products to support AR protocols.
After struggling in 2022 due to the erosion of the digital advertising market, META now stands on much more stable ground. Since the January opener, shares gained over 91% of equity value. In the trailing one-year period, META moved up 16%. Financially, the social media and tech giant features an Altman Z-Score of 7.21, indicating high resilience.
Operationally, Meta posts a solid three-year revenue growth rate of 20.6% and an impressive trailing-year net margin of 19.9%. The latter stat ranks above 82.08% of the competition. Lastly, analysts peg META as a consensus moderate buy. Their average price target comes out to $263.12, implying over 10% upside potential.
Alphabet (GOOG, GOOGL)
Best known for its all-powerful Google ecosystem, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) offers myriad reasons why you should believe in the enterprise. However, the company more than holds its own as both a VR specialist and one of the augmented reality stocks to buy. For the latter, Google developed smartphone tech that visually directs you to your desired destination. For the former, Google offers VR tech for educational purposes.
Financially, Alphabet brings an attractive proposition to the table. First, its Altman Z-Score hits double digits, indicating extremely low bankruptcy risk. Operationally, the company posts a three-year revenue growth rate of 22.9%, above 75.29% of its peers. Also, its free cash flow growth rate during the same period is 27.2%, above 64.34% of the competition.
Also, despite various competitive and economy-related challenges, Alphabet remains a consistently profitable enterprise. Currently, its trailing-year net margin is an impressive 20.58%. To close out, analysts peg GOOG as a unanimous strong buy. Their average price target stands at $124.13, implying almost 15% upside potential.
Autodesk (ADSK)
A multinational software company, Autodesk (NASDAQ:ADSK) software products and services for the architecture, engineering, construction, manufacturing, media, education, and entertainment industries. For VR, Autodesk leverages the technology for various professional uses, such as design review and training, and simulation. Easily, then, ADSK ranks among the most practical virtual reality stocks to buy.
Since the Jan. opener, ADSK popped up nearly 3%. In the trailing one-year period, it’s down 3%, offering a relative discount. On the financial side, Autodesk’s greatest strength stems from its profitability. Specifically, its net margin pings at 16.44%, above 88% of other companies listed in the software industry.
It’s no slouch in the top line either. For instance, Autodesk’s three-year revenue growth rate comes in at 16%, above 69.27% of its peers. Also, its EBITDA growth rate during the same period is 35.7%, an impressive tally. Turning to Wall Street, analysts peg ADSK as a consensus moderate buy. Their average price target lands at $236.76, implying almost 25% upside potential. Thus, it’s a great idea for immersive technology stocks.
Unity Software (U)
Based in San Francisco, California, Unity Software (NYSE:U) is a video game software development company. Fundamentally, Unity provides a platform for engineers to build immersive environments. Thus, it’s one of the more popular VR stocks within the digitalization community. However, it could use some momentum. Since the beginning of January, U stock gained only 1%. What’s worse, shares slipped 61% during the past 365 days.
Financially, investors must be patient. For one thing, the balance sheet, while not the most terrible example you’ll see, isn’t exactly confidence-inspiring either. Conspicuously, its Altman Z-Score sits at 1.08, implying a distressed enterprise with a higher-than-normal risk of bankruptcy. Also, both its operating and net margins sit deeply in negative territory.
On the positive side, Unity features a three-year revenue growth rate of 23.6%. This stat ranks above 79.26% of other software firms. Therefore, it could be one of the virtual reality stocks to buy for speculators. Interestingly, analysts peg U as a consensus moderate buy. Their average price target stands at $41.90, implying over 54% upside potential.
Immersion (IMMR)
Drilling further into the riskiest spectrum of virtual reality stocks to buy, Immersion (NASDAQ:IMMR) is an Aventura, Florida-based developer and licensor of touch feedback technology, also known as haptic technology. However, the company attracts controversy. Because of its practically non-existent research and development expenses, Immersion relies on its patent portfolio to generate revenue and earnings.
As well, many folks against the business model label Immersion as a patent troll. Certainly, IMMR stock isn’t doing the issuing company any favors, tumbling more than 11% since the start of the year. However, it’s worth pointing out that IMMR gained over 42% of equity value in the past 365 days.
Financially, Immersion runs counter to its implications in the charts. Perhaps most noticeably, the company features a strong balance sheet. Specifically, its cash-to-debt ratio pings at 308.1, ranked better than 85% of companies in the software industry. For speculators, that might be enough for consideration as one of the enticing virtual reality stocks. Also, analysts peg IMMR as a consensus moderate buy. Their average price target stands at $11, implying 64% upside potential.
Vuzix (VUZI)
A supplier of wearable display technology, Vuzix (NASDAQ:VUZI) enjoys natural relevancies as one of the virtual reality stocks to buy. Interestingly, Vuzix personal display devices are used for mobile and immersive augmented reality applications, such as 3D gaming, manufacturing training, and military tactical equipment. Since the Jan. opener, VUZI popped up over 10%.
However, the longer-term framework isn’t as attractive. In the past 365 days, VUZI slipped 27%. Over the trailing five years, shares gave up 39% of equity value. Glaringly, investment resource Gurufocus warns its readers that the company may be a possible value trap. With deeply negative margins and a sales trend in the red, Vuzix suffers from a credibility problem.
That said, Vuzix enjoys a cash-rich balance sheet. In particular, its cash-to-debt ratio pings at 75.9, ranked better than 90.42% of companies in the hardware industry. As well, analysts peg VUZI as a consensus strong buy. Their average price target stands at $11.50, implying nearly 190% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.