With investors so skeptical of tech stocks, it may seem like an odd time to dive into virtual reality (VR).
However, the huge VR market size (including related augmented and mixed reality) is expected to reach an estimated $252 billion by 2028, up from just $28 billion in 2021.
That market opportunity is too big to ignore. There are some great companies investing in hardware and software to make it happen.this is the reason apple (AAPL -1.46%), alphabet (GOOG -0.37%) (Google -0.66%)When NVIDIA (NVDA -2.25%) High potential for VR.
Apple’s new headset could soon become a reality
The iPhone maker has long been rumored to be working on a mixed reality headset (with some VR and AR features) that could debut as early as next year.
Renowned Apple analyst Ming-Chi Kuo believes the company will launch a mixed reality headset in 2023, shipping 1.5 million units in the first year.
The timing is still uncertain, but some insights are already known, including that the company has already shown the device to board members (indicating it could be on the market soon).
Bloomberg recently reported that the company is creating an operating system specifically for headsets called xrOS, and is also reportedly launching a separate app store.
Apple could benefit from the headset not only from device sales (the headset is rumored to sell for around $2,000), but also from in-app sales.
Investors will have to wait a little longer for Apple headsets, but the company’s stock is doing pretty well just nowApple’s stock trades at 24 times the company’s earnings, compared to a price-to-earnings ratio (PER) of about 32 times this time last year.
Alphabet’s mobile dominance could translate to VR
Alphabet’s Google has the most VR experience of any company on this list. The company launched his ill-fated augmented reality device Google Glass in 2013 (which still exists in enterprise form), and until last year had a bare-bones VR headset called Google Cardboard.
So what is Google working on now? Some Google insiders reportedly spilled some of the virtual reality beans when speaking with The Verge earlier this year, and the company said he was working on a new AR device that will launch in 2024. I was.
The company had at least 300 employees working on a secret project at the time, hiring people to create an operating system specifically for the device called Project Iris.
The device is not yet available, but investors should consider the possibility of the world’s largest mobile software maker releasing a VR/AR headset.
Google has already proven they can make quality devices, Pixel phones have the best hardware and software, and so many competitors are considering entering the VR/AR space. so Google can take advantage of its software capabilities to take on the challenge. put them in this space.
Add to that VR potential, and the company’s P/E ratio currently stands at 19, so Alphabet looks more attractive now. That’s down from a price/earnings ratio of around 28 this time last year.
Nvidia’s chip could power the future of VR
While Apple and Google are betting on devices and software for the VR space, Nvidia has a unique opportunity with graphics processors.
The company is already the leader in the GPU market, and its high-end graphics processors, used in everything from games to artificial intelligence, are the logical choice for creating virtual worlds.
Nvidia is already creating developer tools and applications that allow businesses and individuals to use their GPUs to build virtual worlds.
Most recently, the company launched Omniverse Cloud. It is defined as “a set of cloud services for artists, developers, and enterprise teams to design, publish, interact with, and experience metaverse applications.”
Emergen Research estimates the size of the AR/VR chip market could reach $19.3 billion by 2030, up from less than $3 billion last year.
Nvidia shares trade at about 76 times the company’s earnings, so tech stocks aren’t cheap. But with Nvidia’s strong position in gaming, industry-leading GPU technology, and commitment to releasing VR tools for developers, Nvidia’s stock has a lot of potential in the growing VR market.
VR is still around the corner
The virtual reality market is still forming. That means investors will have to be patient as this market grows.
But now there’s a shift to VR among many tech companies, and it could end up being an important segment for each of these companies.
For example, Apple’s pursued VR headset market is poised to grow from less than 15 million headset shipments this year to nearly 35 million in 2026.
Additionally, Apple and Google’s pursuit of VR software could help companies grow their service revenue through in-app purchases. And for Nvidia, VR will allow the company to market its chips in entirely new areas, including the Metaverse.
The sheer size of the virtual reality market is a good indicator that VR will be big enough to move the needle in these stocks, but investors should expect VR to take shape over the next couple of years. You may have to wait.