Gaming stocks are among the highest growth drivers in the technology sector. Facebook (NASDAQ:FB) recently made news when it acquired BigBox VR, makers of the battle royale virtual reality title Population: One. It is an ideal time to jump into virtual reality stocks, a critical category of the gaming space.

Wired defines VR as “technology by which computer-aided stimuli create the immersive illusion of being somewhere else.” That immersive illusion manifests in VR headsets. These devices have become a significant driver of growth in the gaming industry. And that only scratches the surface of the true potential found with virtual reality. VR technology is making inroads in several sectors including health care, education and engineering.

But just how big is the opportunity? According to Statista, the global VR market is projected to increase from less than $5 billion in 2021 to over $12 billion in 2024. And between 2021 and 2028, Grand View Research projects the compound annual growth rate (CAGR) of the VR industry to be 18%.

Like another red-hot group of stocks, those of electric vehicles, there are many different ways you can choose to invest in virtual reality stocks. In this article, I’ll give you a few of my selections along with a brief explanation of why they merit your consideration.

Without further adieu, here are my seven virtual reality stocks to buy or keep on your watch list:

• Nvidia (NASDAQ:NVDA)
• Qualcomm (NASDAQ:QCOM)
• Microsoft (NASDAQ:MSFT)
• Apple (NASDAQ:AAPL)
• Lumentum Holdings (NASDAQ:LITE)
• Snap (NYSE:SNAP)
• Unity Software (NYSE:U)

Virtual Reality Stocks: Nvidia (NVDA)

The first stock on my list of virtual reality stocks is Nvidia. The company’s products target professionals, gamers, and developers in almost every corner of the VR industry. Nvidia is currently building some of the fastest graphic processing units (GPUs) for virtual reality. And the company recently launched its VRWorks software development kit, which gives developers the tools to enhance the virtual reality experiences they create.

As part of the red-hot semiconductor industry, an investment in NVDA stock gives you multiple bites at the apple. NVDA is up over 50% for the year and over 115% in the trailing 12 months. However, the stock shows no signs of cooling off. Growth-oriented investors can have confidence knowing that 11 analysts have given Nvidia a price target upgrade since the company last reported earnings. Out of 32 analysts that cover the company, 28 have the stock rated as a “buy” with one “strong buy” rating.

Qualcomm (QCOM)

Qualcomm makes this list for a couple of reasons. First, the company’s relationship with Apple gives it a firm foothold in the 5G buildout. The expansion of 5G technology is critical to the continued growth of virtual reality applications.

However, Qualcomm helps supply the VR sector directly through its Extended Reality (XR) platform. The platform powers mixed-reality (MR) environments, which combine virtual reality and augmented reality. Qualcomm provides reference designs that are based on the Snapdragon chip to allow OEMs to design and manufacture their own headsets.

And one of the company’s partners for Snapdragon XR2 is Facebook, which may provide Qualcomm with a competitive advantage as both companies try to expand their reach in this growing market.

Although QCOM stock is down 9% for the year, recent analyst price targets are suggesting that the stock has been oversold. Of the 28 analysts that cover Qualcomm, 16 give the stock a buy rating and one gives it a “strong buy” rating.

Virtual Reality Stocks: Microsoft (MSFT)

Microsoft has long shed its reputation as just a computer company. It’s clear that the company is clearly making an aggressive push into the world of virtual reality. Microsoft currently has several devices and games that allow consumers to immerse themselves in a mixed reality world. Plus, the company is making inroads with the developer community, which will be critical to gaining market share.

Microsoft has continually shown that once it puts its considerable weight behind an initiative, it’s likely to succeed. That’s one reason to buy MSFT stock. However, the story gets better. The company already has made significant VR inroads with commercial and military customers. In fact, Microsoft signed a $480 million contract with the U.S. Army in 2018 to develop headsets that will prepare soldiers for real-world combat situations.

The company’s release of the HoloLens 2 headset carries a $3,500 price tag that puts it out of reach for the casual consumer. The corporate market, though, has provided a home for the device.

Apple (AAPL)

If you’re looking at virtual reality stocks that are positioned to go toe-to-toe with Facebook, then Apple is a good place to start. The two companies have been in a public feud over user privacy. Apple has followed through with its intention to allow iOS users to opt-out of data-tracking apps.

But virtual reality is another field where Apple is beginning to flex its muscle as well. The company is expected to release its own AR/VR headset in 2022. That will be followed up with a lighter pair of AR glasses in 2025.

For several years, increasing revenue in its Services and Wearables, Home and Accessories areas has been a key driver of AAPL stock price growth. A new VR product would be another way for Apple to expand its revenue base beyond its many signature devices. It would also be a definitive statement from Apple that it intends to be a player in the AR/VR ecosystem, which may be part of a larger strategy to launch an autonomous vehicle.

Virtual Reality Stocks: Lumentum Holdings (LITE)

Lumentum could be considered one of the founding fathers of virtual reality. The company manufactures optical and photonic products that are essential for the higher bandwidth requirements of the 5G rollout.

In recent years, the company made a pivot. Instead of merely building transceivers, it became a company that supplies the parts that are needed to make transceivers. This puts the company in a market category with less competition.

As far as virtual reality stocks go, LITE stock is a laggard. But that may present investors with a buying opportunity. This is because one of the areas Lumentum is focused on is the 3D sensing lidar segment, which will be critical in making autonomous vehicles a reality.

Currently, analysts have a consensus price target that gives LITE stock an upside of nearly 17%. And of the 16 analysts that cover the stock, it has 10 buy ratings and one “strong buy” rating.

Snap (SNAP)

Snap is perhaps best known as being the parent company for Snapchat, the social media app that was one of the first to showcase virtual reality and augmented reality. Users loved the ability to enhance their selfies in fun and shareable ways. That ability to share their edited photos gave consumers a reason to engage with the technology on a daily basis.

The technology is also helping Snap to, as the saying goes, skate to where the puck is moving. The Covid-19 pandemic revealed many inefficiencies in the consumer experience. The Snapchat app solves some of these by allowing users to conduct virtual previews for products ranging from shoes to nail polish.

But what started out as ubiquitous filters is becoming big business. Snap is reportedly adding AR features to its Spectacles glasses and has been adding AR features to its in-app advertising.

SNAP stock has had a bumpy ride, but it has still produced a 33% gain in 2021. The company has posted years of consecutive quarters of accelerating double-digit revenue growth. And analysts are expecting the company to continue that trend when the company reports earnings in July.

Virtual Reality Stocks: Unity Software (U)

The last of my virtual reality stocks is Unity Software. Unity’s products are not consumer facing. However, they play a critical role in meeting the needs of the developer community. Specifically, Unity provides a real-time development platform for gaming on the desktop, mobile and console platforms.

Unity is now offering development tools that will support VR applications. Developers are rapidly migrating from linear 2D to real-time 3D in their content creation. Virtual reality will play a significant role in that.

In a 2020 survey, 96% of developers responded that they would be maintaining or increasing their subscriptions. And approximately 62.5% said that ease of use was a primary reason for their loyalty to Unity’s platform. And Unity Software is finding other applications for its software in sectors such as real estate, healthcare, and energy.

Investors may be sour on U stock based on the company’s quarterly loss of $110.9 million. The loss is largely explained by a nearly doubling of R&D expenses. However, the company’s revenue is increasing as is the proportion of customers who spend over $100,000.

On the date of publication, Chris Markoch 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.

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.