The virtual reality market is expected to grow at a compound annual rate approaching 25% during the period from 2024 to 2029. That rate of growth is very attractive and will drive investment into the sector.
2024 is poised to be an especially strong year for the augmented and virtual reality sector. Major firms release AR/VR headsets, for one. Additionally, the macroeconomic situation is improving. The Federal Reserve is expected to cut the FED funds rate three times in 2024.
Those rate cuts promise to incentivize greater lending activity overall which will serve to further prime the economic growth engine. The overall thrust is a positive one and it should serve to benefit augmented reality stocks.
The device acts as both an augmented reality and a virtual reality headset depending upon the environment. Users can toggle a dial to switch between VR and AR. In augmented reality mode, the user’s eyes will be visible to those who look at the device wearer. Neither YouTube nor Netflix are currently building dedicated apps for the Vision Pro.
Regardless, Apple will soon have entered the augmented reality space. Investors shouldn’t expect the sales of the Vision Pro to substantially influence Apple’s share price. It’s likely that the Vision Pro will add as much as a few billion dollars to Apple’s top line results in 2024 at most.
While that is a substantial number for most firms, Apple is not most firms. Expect, instead, that Apple may again be able to build a cult following for the product as it has for others in the past. If that transpires, it’s reasonable to expect that the Vision Pro could substantially influence share prices in the future.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) continues to rapidly head in the right direction as its share prices test former highs. The release of Apple’s Vision Pro, along with the continued growth of augmented reality, suggest that its stock should continue to grow.
Metal Platforms has long led the charge into the virtual reality and augmented reality space in Silicon Valley. Back in 2014, the company acquired Oculus. CEO Mark Zuckerberg has not been shy about his aspirations in the emerging industry.
In 2017, Zuckerberg announced that he had a goal to get 1 billion people connected through virtual reality. Of course, Zuckerberg doubled down on his bet famously in 2021 with the rebrand of Facebook into Meta Platforms.
Zuckerberg’s goal of getting 1 billion people connected through virtual reality has not exactly materialized. By early 2023, the company had sold roughly 20 million headsets in its history. Nevertheless, it’s reasonable to argue that the tide is turning and Meta Platforms is well positioned given how much it has invested in the continued development of the industry.
Graphical prowess is an integral part of the continued development of the augmented reality space. That’s where Nvidia (NASDAQ:NVDA) and its stock enter this discussion. Nvidia has established a dominant position in the graphics in relation to graphics with GPUs that are well-known across gaming platforms.
As much as gamers demand strong graphical capabilities, the world of augmented and virtual reality demands even greater graphics. Meta Platforms release of Horizon Worlds in late 2022 should serve as a constant reminder of that truth. When it was released, it was widely derided for exactly that reason. In short, users demand graphics that bring them into worlds that they have never seen before.
Nvidia is widely known to provide the level of technological capability that will allow such worlds to be built. Augmented reality may not be the first reason investors choose to direct their capital into Nvidia but it is an area that the company can benefit from.
On the date of publication, Alex Sirois 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.