Reality is beginning to bite for people cooped up in their homes for the past few months. With the recent spike in novel coronavirus cases in the U.S. and other parts of the world, it’s clear that the pandemic has not quite subsided as yet. Therefore, people are looking for variety in their entertainment, and tech companies are hoping that it comes in the form of virtual reality. This, in turn, has driven many investors to seek out key virtual reality stocks to buy now.
Tech companies have been investing heavily in VR for the past few years, hoping for a breakthrough sometime soon. Industry insiders feel that with the majority of people still locked in their homes, this could potentially be the breakthrough year for VR.
In fact, Facebook (NASDAQ:FB) said it made roughly $300 million in non-advertising revenues in the first quarter, a year-over-year increase of approximately 80%, driven by increased Oculus VR headsets. With this stat in mind, it’s imperative to look at some of the investable virtual reality stocks which are benefiting from the pandemic. These stocks include the following:
Let’s take a look at what makes each of these among the best virtual reality stocks to consider now.
Virtual Reality Stocks: Facebook (FB)
Facebook launched its Oculus Quest VR headset last May after the Oculus Go. It sold 705,000 of the Quest headsets since 2019, but missed estimated sales of 1.1 million. However, it has more than made up the lost ground with its VR content, of which it has sold over $100 million since last year.
On the advertising side, VR has played a significant role in Facebook’s earnings in the first quarter. Non-advertising revenues grew by 80% compared to 2019. A lot of the advertising is related to VR-related content, especially Valve’s hit VR game Half-life: Alyx.
Half-life fans have two excellent options from Oculus if they wish to avoid pricey headsets. Each option — the Oculus Rift and the Oculus Quest — sells for just $399. Half-life: Alyx received rave reviews when it released on March 23 this year and has added an estimated 1 million users to the VR market.
Facebook is in it for the long haul as far as VR is concerned. It recently acquired Ready Dawn Studios and has talked about focusing on higher-end virtual reality products in the future. VR is a tiny portion of Facebook’s revenues, but it could potentially become one of the catalysts for its future growth. That makes FB stock a promising virtual reality stock to consider.
Microsoft’s VR journey has been rocky. It garnered a lot of interest from the industry when it released its augmented reality project called Windows Mixed Reality in 2017. It convinced several of its computer partners to release VR headsets for its AR project, but only two launched successors for Mixed Reality since their initial release.
However, despite encountering several setbacks, Microsoft continues to believe in the potential of VR and will focus on improving its hardware. Its VR headset, called HoloLens, had evolved significantly from when it first released back in 2016. The second edition of the HoloLens has done significantly better than its first iteration by being more comfortable and immersive.
Microsoft continues to add new features to the HoloLens, most recently announcing 5G support for the device. The company hopes to leverage the device alongside the release of its next-generation video game console in the Xbox Series X later this year. Therefore, Microsoft is in an excellent position to take a sizeable chunk out of the VR market in the coming years if it continues to improve its hardware and software.
Qualcomm is arguably one of the most innovative players in the VR market and is investing heavily in AR and VR, and betting big on 5G. 5G allows for faster connectivity, which will enable different manufacturers to build their devices lighter and compact than ever before.
Qualcomm released its XR2 chipset platform, which is “the world’s first 5G-supported extended reality (XR) platform” back late last year. Additionally, it has also announced its plans to develop a 5G-enabled, smartphone-driven headset with the help of several global telecoms, smartphone companies.
“XR viewer” refers explicitly to lightweight AR and VR headsets, which can connect to a smartphone. In the case of Qualcomm’s offering, they will either be powered by its flagship Snapdragon 855 or 865 chipsets. Its Snapdragon chipsets are part of its XR2 chipset platform, which are currently being used by over 30 VR and AR headsets. Therefore, Qualcomm aims to be a needle-mover once the 5G era is in full flow. All of this adds up to make QCOM stock a VR play worth keeping on your radar.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University. He does not directly own the securities mentioned above. As of this writing, Muslim Farooque did not hold a position in any of the aforementioned securities.