You can’t wade too far through tech headlines without seeing the latest coverage about augmented reality. There’s the world’s first augmented reality zipline, augmented reality avatars, augmented reality to transform healthcare, and the list goes on. But are augmented reality stocks actually something you can invest in? Or put another way — are there legitimate augmented reality stocks out there?
Most publicly traded companies that could be considered augmented reality plays have their hands in many other tech pots beyond just AR, which is still a relatively emerging market. Here are three ways to play the trend.
Augmented Reality Stocks: Tech giants
Names like Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT) are just a few established tech companies working augmented reality into their offering, whether through software or hardware. As AdAge wrote recently, “Software for smartphones by Apple and Google had over half a billion AR-capable devices in the market by the end of 2017. That number is expected to grow to 4.25 billion devices by 2020.”
More specifically, Microsoft has a headset call the HoloLens. Apple recently announced AR for iOS. And Google has AR Expeditiions and augmented reality worked into its Translate app, among others. These are good ways to get exposure to AR without worrying about extremely niche or possibly sketchy companies.
Augmented Reality Stocks: Chip-makers
Another way to put some money behind the augmented reality trends is to bet on the companies making AR chips. In May, for example, chipmaker Qualcomm (NASDAQ:QCOM) announced its first-ever chip dedicated solely to AR and virtual reality (VR), called the XR1. As Circuit Breaker summarized, “Qualcomm’s processors have ended up in plenty of AR and VR devices over the past couple years. But … none of those chips have been fully dedicated to augmented and virtual reality — they’ve just been repurposed phone processors.”
That changes with the XR1, which is supposed to lower the price barrier to AR. Nvidia (NASDAQ:NVDA) is the other obvious chip play — one that’s long dominated the overall chip market.
Augmented Reality Stocks: Sensor-makers
Another key part of augmented reality is sensors, which is why many people have been bullish on Lumentum Holdings (NASDAQ:LITE). In fact, when Tim Cook expressed just how everyday he thinks AR will be, CNBC ran a piece calling Lumentum “one of the hottest stocks of 2018” if he’s right. The company makes 3D sensing lasers that Apple uses — though Apple did award a contract at the end of last year to competitor Finisar (NASDAQ: FNSR), another sensing laser bet on the augmented reality trend.
In all, there aren’t many direct plays on augmented reality. But there are many ways to get some exposure in your portfolio. As the market continues to expand and mature, this is sure to change. You’ll probably see some new companies focused on AR and VR hitting the public markets and you’ll probably see other established players pivoting toward the trend more dramatically.
But for now, the best way to bet on augmented reality stocks is to buy big-name tech stocks, chip-makers, or sensor-makers.
As of this writing, Robert Martin was long AAPL.
