Virtual reality (VR) stocks ride on the coattails of trends seen in the market, such as the metaverse, cloud gaming and immersive entertainment experiences. Virtual reality draws them together, and I think we have only just started to witness its full potential.
The VR market, already valued at $22.81 billion in 2024, is projected to grow exponentially, driven by innovations in hardware and software. Companies at the forefront of this trend are not only changing how we entertain ourselves but also how we communicate with others in general. My view is that over time, society will live in deeper and deeper virtual worlds. This, however, will be a gradual change rather than a seismic shift. Instead of us all being plugged into VR headsets, we will interact with more virtual worlds embedded into apps and websites we already use, particularly in the realm of social media.
So, in order to take advantage of this trend in the entertainment industry, here are seven virtual reality stocks for investors to consider.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is a stock that has been criticized in the past for overselling the metaverse ideas to the masses. However, my view is that it is positioning itself at the forefront of the gradual shift toward virtual environments, and its results in the short term certainly speak volumes.
With revenue of $39.07 billion, a 22% increase year-over-year (YOY), and net income surging by 73% last quarter, it can be hard to argue that the company is on the wrong track — at least in the short term. Meanwhile, for investors interested in META as one of those virtual reality stocks in the gaming industry, I think the best has yet to come. The company’s flagship product in this space, the Meta Quest series of VR headsets, has established Meta as a leading player in the VR gaming industry, with reviewers mentioning it among the best of the best in terms of affordability and features offered.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is one of those virtual reality stocks to consider if an investor wants exposure to a picks and shovels stock in the industry. The company provides essential semiconductors to a range of industries, including VR. They can also be found in devices that range from self-driving cars to Industrial Internet of Things (IIoT) devices. I like QCOM stock because it is not overly concentrated in any given industry, thus giving it impressive diversification benefits.
QCOM makes its presence felt in the gaming industry through its Snapdragon platform, which powers many of the world’s leading gaming smartphones. In its fiscal third quarter of 2024, Qualcomm reported strong revenue growth, with its QCT (Qualcomm CDMA Technologies) division generating $8.07 billion, a 12% increase YOY.
One of the main tailwinds I see from QCOM in the gaming industry is the rollout of 5G and increasing mobile network speeds. I don’t think we are too far away from the point where multiplayer mobile games can be played on these networks with a low ping or latency, which substantially reduces user friction to enjoying entertainment on the move.
Unity Software (U)
Unity Software (NYSE:U) is another one of those virtual reality stocks that also fits firmly in the picks and shovels category. It provides its Unity game engine, which is seeing increased use in VR gaming to create virtual worlds, most notably by independent developers.
Unity’s platform is responsible for 70% of the top mobile games and averages 3.7 billion downloads per month, according to the results it posted last quarter. Unity 6, set to launch in the fall of 2024, promises to be the software’s most stable and high-performing version yet. I see it as having an expanding use case in VR devices, including the Oculus, HTC Vive and PlayStation VR.
It is still very early for Unity’s software to be utilized in virtual environments, as its engine is primarily used in mobile gaming. Still, as demand picks up, I think its engine will become the preferred choice of developers who choose to create games in VR since they are likely already familiar with building games with it.
Roblox (RBLX)
Roblox (NYSE:RBLX) is perhaps one of the best virtual reality stocks for investors who want a pure-play gaming franchise in their portfolios. Although RBLX is known for its presence in the PC and console markets, Roblox empowers its global community of creators to design and build VR experiences that can be accessed by users on newer devices, including VR headsets.
There are a couple of reasons why I think RBLX stock could be an ideal opportunity for investors. Roblox enables creators to experiment with new forms of digital interaction, from social experiences to complex games, which enables a smooth transition for more of these creations to be conducted in virtual worlds.
Furthermore, its core business also showed considerable strength last quarter. Revenue increased by 31% YOY to $893.5 million, and bookings grew by 22% to $955.2 million. The company saw record daily active users (DAUs) of 79.5 million, up 21%. This makes it one of those virtual reality stocks for investors to consider.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is one of those gatekeepers of VR content on the internet, and I expect it to continue to play a leading role in the future through its Google services, particularly YouTube and Google Play, which support VR content and experiences. It acts as a main distributor of content for people to access.
The company achieved $84.7 billion in revenue last quarter, with significant contributions from Google Services and Google Cloud, the latter exceeding $10 billion in quarterly revenues for the first time.
GOOG stock has a stranglehold over the app market as well as the online streaming market with its YouTube platform. As gaming and VR experiences continue to be rolled out on the platform, I expect this to be a major boon for the company moving forward.
I like GOOG stock due to its solid position in the online advertising market, and it also stands to benefit from the rise of VR as an additional tailwind.
Matterport (MTTR)
I like Matterport (NASDAQ:MTTR) in the VR gaming industry, especially when one frames its long-term positioning with its short-term results last quarter, with total revenue reaching $42.2 million, driven by a 16% YOY increase in subscription revenue to $24.2 million. The company also saw a 28% increase in total subscribers to 1.06 million.
MTTR stock has an enormous application in VR gaming and is one of the key reasons I’m bullish on its future prospects. By transforming physical spaces into immersive, interactive 3D models, Matterport enables developers and gamers to create and explore realistic virtual environments. This is achieved through its digital twin technology and spatial data platform.
It could then be a great piece in the puzzle for hyper-realistic gaming, such as transforming city streets into driving simulations or real-world forests into the backdrop of a horror or survival game. I expect great things in the future for MTTR stock as it taps into the gaming market in VR.
Take-Two Interactive (TTWO)
Take-Two Interactive (NASDAQ:TTWO) is another publisher in a similar vein to RBLX that stands to benefit directly from VR gaming with its established and captive user base. Its titles like “Grand Theft Auto” and “NBA 2K” could be prime targets for the company to experiment with developing virtual worlds. It has exclusive rights to some of the world’s most popular video game franchises, especially in sports, so I think it could be a prime investment target for those looking to capitalize on the VR gaming trend.
Last quarter, it recorded $1.22 billion in net bookings, meeting guidance. GAAP net revenue grew 4% YOY to $1.34 billion. However, it also reported a GAAP net loss of $262 million.
Still, for investors serious about the opportunities in VR gaming, which is a recognition that we have yet to see the start of its potential, stocks like RBLX and TTWO could be worthy to consider as both firms seek to expand their catalogs.
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 held a long position in GOOG.
