As we enter July 2024, augmented reality (AR) stocks are catching the eyes of forward-thinking investors looking to tap into the next technological revolution. AR technology has been developing quietly in the background. Its integration across diverse sectors such as retail, healthcare and automotive is setting the stage for exponential growth.

The augmented reality market was valued at $57.2 billion in 2023 and is projected to expand at a staggering CAGR of 39.8% till 2030. Despite the market’s promising future, some AR stocks have been relatively undervalued. More immediate impacts of AI and semiconductor industries overshadow them.

As we approach July 2024, these three AR stocks are poised for growth. These stocks are attractive picks for investors aiming to diversify their portfolios with cutting-edge technology stocks. Each of these companies shows strong fundamentals and stands at the forefront of innovation, ready to capitalize on the expanding applications of augmented reality.

Autodesk (ADSK)

Autodesk (NASDAQ:ADSK) is widely recognized for its innovative software solutions that have transformed the architecture, engineering, and construction industries. In recent years, the company has aggressively expanded into augmented reality, leveraging its technological expertise to enhance visualization, collaboration, and interaction within the design and construction processes.

Autodesk’s transition from perpetual licenses to subscription services is a pivotal move that reflects its adaptability and forward-thinking approach. This shift provides a more stable revenue stream and enhances customer satisfaction through continuous updates and support. Since implementing this change, Autodesk has seen a notable acceleration in its revenue growth, demonstrating the effectiveness of its strategy.

Autodesk’s financial health is robust, with the company showing a steady increase in revenue. In its fiscal year 2024, Autodesk achieved a 9.6% revenue growth, consistently adding approximately $500-$600 million annually over the last few years. High gross margins consistently above 90% support this growth trajectory, indicating strong pricing power and low incremental costs associated with their software model.

Unity (U)

Unity‘s (NYSE:U) comprehensive platform enables developers to create interactive and immersive content across various industries. Using Unity’s platform, developers can build highly interactive AR experiences.

Unity’s stock price declined significantly in 2024. However, the company has recently narrowed its focus on its core video game creation products. This meant exiting less profitable or non-core business segments such as hardware components for multiplayer games and certain professional services.

This pivot aims to streamline Unity’s operations and strengthen its financial position. Unity exceeded revenue expectations in the first quarter of 2024. This signaled robust business despite the broader restructuring.

The company’s strategic refocus should reinvigorate its product innovation, particularly in its flagship game development offerings. Unity has been a leader in providing game developers with powerful tools to create immersive and interactive content, and by doubling down on this core competency, it aims to solidify its market position and drive future growth.

Adobe (ADBE)

Adobe (NASDAQ:ADBE) is known for comprehensive creative software. However, the company is making large strides in Augmented Reality.

Adobe’s approach to augmented reality is integrated through its Creative Cloud platform, leveraging existing applications like Adobe Aero. Aero allows users to create interactive AR experiences without requiring complex coding skills. It is intuitive and taps into the vast community of creative professionals familiar with Adobe’s interfaces.

Adobe’s fiscal Q2 2024 performance showcased robust financial health, with revenue climbing to $5.31 billion, marking a 10.2% year-over-year (YoY) increase. This outperformance is partially credited to the company’s aggressive AI integration, notably through its Creative Cloud and Document Cloud segments. Both have seen significant adoption and innovation boosts.

The integration of AI has fortified Adobe’s product offerings and positioned it as a leader in AI-driven creative and document solutions. This contributed to a 15% YoY increase in non-GAAP diluted EPS, which now stands at $4.48.

On the date of publication, Mohammed Saqib 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 did not have (either directly or
indirectly) any positions in the securities mentioned in this article.