8 Virtual Reality Stocks to Watch in 2020
Eight of the top VR and AR companies in the world.
As the pandemic keeps everyone locked up indoors, it's easy to understand the appeal of virtual reality, or VR. The ability to virtually escape the confines of our own homes sounds like a dream come true after weeks of social distancing, and the virus has illustrated the possibilities of virtual reality more clearly than ever before. Shopping, education, gaming, doctor's visits -- virtual reality stands poised to change a variety of industries, and with everyone stuck at home, there's plenty of motivation for companies to expand their virtual and augmented reality, or AR, offerings. Read on to discover how the following eight companies have invested in reshaping reality: These are the top VR and AR stocks to watch in 2020.
Facebook (ticker: FB)
Facebook practically launched the VR market as we know it back in 2014 with its purchase of Oculus. Unfortunately, while the debut of the Oculus Rift headset in 2016 may have caught a lot of attention, sales of the Rift and subsequent headsets -- including the new Oculus Quest -- haven't had much of an effect on Facebook's bottom line. But the advancements the company has made in the quality of its Oculus headsets are undeniable and have come alongside Facebook's advances in augmented reality. Filters for photos and videos captured on Instagram and Facebook Messenger have popularized AR for a large, youthful and technologically savvy user base that Facebook hopes to someday capitalize on with its virtual reality headsets -- and while that day is still a ways off, it continues to draw ever closer, making Facebook one of the best VR stocks today.
Microsoft Corp. (MSFT)
While Facebook has focused on consumers with its VR devices, Microsoft has focused on businesses. The company premiered the HoloLens headset back in 2016, and its newest headset, the HoloLens 2, went on sale in late 2019. Don't expect to see the HoloLens 2 on store shelves anytime soon, though -- the $3,500 mixed reality headset is geared exclusively toward enterprise customers, offering holographic interfaces designed to assist anyone who works with their hands, from auto-repair workers to surgeons. Microsoft's headset has the potential to grow beyond just enterprise solutions; in 2018, Microsoft secured a $480 million contract with the Pentagon to supply the U.S. Army with HoloLens headsets for training purposes, and the company has created an AR version of the popular Minecraft video game just for the HoloLens. When virtual reality does eventually take off, Microsoft will be poised to follow in whichever direction the market takes.
Alphabet is another one of the biggest virtual reality stocks; even as Microsoft developed VR devices with large price tags, Alphabet took a much different approach. Back in 2014, the company debuted Google Cardboard, a cardboard viewer into which users could insert their smartphones to create an instant virtual reality headset. The low-cost approach was successful enough that the company rolled out the Google Daydream headset in late 2016 at the low price of $79. Although, the company discontinued it in 2019, and Alphabet has yet to attempt another headset. As for augmented reality, Google Glass never took off for consumers the way the company hoped, and it has since pivoted to enterprise solutions. Meanwhile, the company has begun integrating AR technology throughout its Android operating system in Google Maps, Google Lens and Google Pixel smartphones.
Sony Corp. (SNE)
The story of the VR market is simple: Companies try to entice consumers with unproven and expensive technology, and when that inevitably fails, they eventually pivot to enterprise customers. The exception to this rule has been Sony, which has positioned its PlayStation VR (PSVR) headset as an excellent choice for VR "noobs." The affordability of the platform coupled with an impressively large library of games makes it an attractive entry point for gamers who are curious about virtual reality and know and trust the Sony brand. This has made the PSVR the best-selling VR headset on the market, with 5 million units sold as of January 2020. Given the warm reception for Sony's VR headset, there's a strong likelihood that an updated version will be released sometime after the new PlayStation 5 hits store shelves this holiday season.
Intel Corp. (INTC)
Putting on a headset and stepping into a virtual world is all well and good, but the experience is only possible thanks to the hardware under the hood. Considering Intel is one of the largest semiconductor manufacturers in the world, it's no surprise that its products power VR headsets produced by several different companies, including Oculus and HTC. What may surprise you is how far beyond simple hardware Intel's interest in VR goes -- the company has long invested in the VR Challenger League, the first VR esports league, and has a vested interest in real sports as well, utilizing Intel True VR to give viewers an on-field virtual reality experience with their favorite teams. So while Intel has come up short with its own VR and AR headsets -- R.I.P. Vaunt and Project Alloy -- providing the hardware to make headsets work as well as the content users view through those headsets isn't a bad business model.
Qualcomm (QCOM)
Speaking of powering your VR experience, Qualcomm has been investing heavily in virtual and augmented reality and is betting especially big on 5G. With 5G cellular networks comes faster internet speeds, which means makers of AR and VR headsets can build their devices smaller and lighter as they split computing between the device and the cloud. Qualcomm aims to be a first-mover once 5G becomes widely available. The company released its new XR2 chipset platform -- a version of its Snapdragon 865 chip -- that is also "the world's first 5G-supported extended reality (XR) platform" in December 2019. The company has struck a deal with Pokémon Go developer Niantic to create AR glasses using Qualcomm's XR2, while Beijing-based startup Nreal will release a pair of AR glasses using Qualcomm's older chipset sometime this year.
Snap (SNAP)
Snap, the parent company of popular social media app Snapchat, pioneered what many consumers would think of as augmented reality. The company's fun filters have entertained hundreds of millions of users who are all too happy to add puppy dog ears to their selfies, even if its Snapchat Spectacles -- the company's AR glasses -- have fallen short of the mark. Still, despite the lukewarm response to its AR glasses and the fact that the company has yet to make a profit, Snap's recent earnings report showed a 20% year-over-year increase in daily active users. What's more, 75% of its daily users "engage with augmented reality every day on average," illustrating that the company's audience is engrossed by its filters and new lenses.
Apple (AAPL)
Not to be left behind by its largest Big Tech rivals, Apple has dipped its toes into the virtual reality market slowly but surely. The company has purchased several AR and VR companies over the last few years, such as Metaio, Vrvana and Akonia Holographics. Its most recent acquisition took place in April when the company bought livestreaming service NextVR for $100 million. Though the company has yet to release any AR or VR hardware of its own, it has been widely rumored since 2018 that Apple is working on an augmented reality headset, and reports indicate that it's scheduled for release sometime in 2022. In the meantime, the company released its ARKit back in 2017, which allows developers to create AR apps for iPhone and iPad devices. Given the size of its customer base, if and when Apple decides to fully dive into this market, the company is sure to make a splash.
Leading AR and VR tech companies in 2020.
-- Facebook (FB)
-- Microsoft Corp. (MSFT)
-- Sony (SNE)
-- Intel Corp. (INTC)
-- Qualcomm (QCOM)
-- Snap (SNAP)
-- Apple (AAPL)
Mark Reeth is a contributing writer for U.S. News & World Report, where he writes about anything and everything to do with investing. Prior to U.S. News, Mark covered consumer goods, technology, and telecom stocks for The Motley Fool. When he's not writing about investment strategies Mark is busy running his own small business, which has given him a better appreciation of the personal finance trials and tribulations of entrepreneurs everywhere.
Mark is a graduate of the College of the Holy Cross, where he studied History and Education. You can connect with Mark via LinkedIn, or follow him on Twitter.
