Holding augmented reality (AR) stocks is a rather profitable prospect as the industry is still rapidly expanding year by year.
The AR market was valued at $57.26 billion in 2023. It is expected to grow at a compound annual growth rate (CAGR) of 39.8% until 2030. This fast growth is attributed to the fact that AR has been adopted across many industries, including the retail, healthcare and automotive industries. It is worth mentioning that AR technology improves productivity and the quality of services in these industries by offering engaging and immersive applications.
Another reason I’m bullish on augmented reality stocks is that private companies and governments are putting in a lot of money in the AR sector, a major driving force. New hardware and software are being invented by the companies and many governments are funding AR projects to increase service delivery and economic development.
So, if you want to diversify your portfolio into this growing sector, read on. Here are three augmented reality stocks that could be multibaggers in the making for July.
Autodesk (ADSK)
Autodesk (NASDAQ:ADSK) is a leader in computer-aided design (CAD) software, which has significant applications in AR.
In my view, Autodesk could be a good investment, as it is one of the leaders with competitive advantages in the CAD software market. Among the competitors, Autodesk leads the market with a 55% market share, which is significantly greater than its competitors.
And as Autodesk is in the middle of the business transformation, switching to the cloud and the subscription model, these changes will help to increase the company’s value in the future by increasing customer retention and decreasing costs. Also, there is an opportunity for growth through the use of advanced technologies like Bernini that automates 3D design.
I think ADSK could be one of those multibaggers since its software is a key component to bringing AR and virtual reality (VR) environments to life. A stock split could also be on the horizon, as it currently trades at $253.45 per share.
Unity Software (U)
Unity Software (NYSE:U) provides a popular platform for creating 3D and AR content. Unity’s platform has become an essential tool for game developers and any other organization seeking to leverage AR/VR environments. It’s one of those augmented reality stocks I think has the potential to become a multibagger.
Like ADSK, Unity has also pivoted from a less reliable transactional model to a more reliable subscription model, which is a strategic move I think will give greater visibility into the company’s future earnings.
Hence, based on the current valuation and considering the fact that Unity is considerably undervalued as compared to its peers, I believe investors willing to accept the existing volatility in the stock could position themselves to get a multibagger in the form of Unity.
The company’s market cap at just $6.69 billion means there’s plenty of room for growth, and since it trades at just 3x sales, it could rise much higher before a correction could be deemed necessary.
Snap (SNAP)
Snap (NYSE:SNAP) is a pioneer in integrating AR into social media. I think SNAP is one of those augmented reality stocks pioneering the industry forward and has reached some commercial success that underlines its viability for others.
I consider SNAP an attractive investment candidate with the help of the Snapchat+ subscription service. This subscription service, which comes with more features and the use of AI, has already contributed to 7% of Snap’s total revenue.
Snapchat+ has also gained subscribers at a very high rate, and as of the first quarter of 2024, it has 9 million subscribers, with Snap aiming to achieve 14 million subscribers by the end of the year.
I think SNAP has some of the best potential in the AR/VR space to become a multibagger. It has a low valuation, trading at just 5 times sales and a market cap of $27 billion. At $16.18 per share at the time of writing, I’m projecting it could double in value over the next 10 years, thus making it one of those augmented reality stocks with strong potential.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
