In Friday’s Q3 2024 strategy outlook, BCA Research forecasted a hard landing for the economy. The Canadian investment research company projects the S&P 500 index drop from current 5,460 to 3,750, indicating a 31% devaluation of the stock market by the end of the year or in early 2025, highlighting the urgency to consider augmented reality stocks to sell.
BCA’s chief global strategist, Peter Berezin, points to the slowdown in job openings and slowed wage growth to spill over to weakened consumer power. Combined with depleted Covid-era excess savings, even the AI-driven boom is not likely to stave off companies from reducing their capital expenditures
Although this is reminiscent of recession calls throughout 2023 that failed to materialize, this could be a case of postponement. After all, there is no historical record of the Fed achieving a true soft landing even once. Bearing in mind the softish landing or outright hard landing, these augmented reality stocks to sell should be prioritized.
At the end of the day, an augmentation is an extra layer, which takes a back seat in a hard landing scenario hitting discretionary spending.
Alphabet (GOOG, GOOGL)
Although Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) bread and butter comes from Google Services, the company has dabbled in augmented reality. Having received a similar hype as Apple’s (NASDAQ:AAPL) Vision Pro, Google Glass spectacles ended up getting canceled in 2015.
The AR experiment suffered from multiple hardware issues. It saw poor voice recognition, along with unsuitable camera quality and battery life, leaving it stranded from mass adoption. Now that AI is at the forefront of Big Tech, Google is revisiting the concept with Project Astra. The company showcased the design at its annual developer Mountain View conference in May.
Presently restricted to a smart phone app to interpret reality, a hands free wearable solution would be the obvious choice. However, Google has become notorious for self-imposed restrictions to accurately interpret reality.
Not only was this demonstrated with Google’s Gemini launch debacle, but hardly a month goes by without a new demonstration of Google’s ideological commitments overriding user experience. Most importantly, a hard landing hit on small and medium-sized businesses (SMBs) would significantly cut into Google’s ad revenue.
The present price exit ramp is aligned with that outlook, as GOOGL stock gained 32% value year-to-date. In fact, GOOGL stock reached an all-time high of $186.86 only recently, on June 27th. Investors should depart GOOGL shares on that good note, considering its 52-week average of $145.30 per share.
Autodesk (ADSK)
As a dedicated software platform for generating virtual environments, Autodesk (NASDAQ:ADSK) shifted resources to AR as well. In 2022, the company bought The Wild, a cloud-based extended reality (XR) platform to integrate into its suite of tools.
All about streamlining tools to remain the 3D leader, Autodesk also launched Workshop AR to test 3D immersion deployment in real-time. However, while Autodesk is both a solid metaverse and AR exposure, a hard recession outlook makes ADSK stock a good choice for one of the augmented reality stocks to sell.
Relying on new licenses, subscription renewals and Autodesk’s dependance on the manufacturing and construction sectors has the company looking at significant cash flow turndowns. SMEs struggling with their own cash flows would likely turn to Autodesk’s free competitors.
In the latest fiscal Q1 2025 earnings report, Autodesk reported $227 million free cash flow reduction from the year-ago quarter. Year-to-date, ADSK stock flatlined at 5% gains. Similarly to GOOGL, the present ADSK price of $245 is a solid exit point, holding close to the 52-week high of $279 per share.
Meta (META)
The most established metaverse company, Meta (NASDAQ:META) is the obvious choice to consider as one of top augmented reality stocks to sell. Despite a continued push for extended reality, the company ended 2023 with a 40% year-over-year drop in VR headset sales.
In Q1 earnings call, Meta significantly increased its full-year 2024 capital expenditures, from $30-37 billion to $35-40 billion. As expected, the Reality Labs division is expected to continue to rack up operating losses.
In a hard landing scenario, ad revenue-reliant Meta holds nearly-identical vulnerability to Alphabet. However, Meta doesn’t have the metaverse baggage, which would then be perceived as a luxury at the end of a long line of discretionary spending considerations. On the upside, META stock greatly outperformed the broader market at 41% YTD gains.
At the present price of $504, META stock is close to its 52-week high of $531, making it an excellent candidate for locking in the profits. Later down the line, a buy-the-dip action should be considered as well.
On the date of publication, Shane Neagle did not hold (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.
On the date of publication, the responsible editor held a LONG position in GOOG.
