While you might not personally be a fan of digitally immersive experiences, the industry is taking over and that means virtual reality stocks offer a potentially compelling upside opportunity.
Personally, I’m not too big on VR. My brain just doesn’t sense a frame of reference and I get sick very easily. However, most of the consumer base doesn’t feel that way apparently. According to Mordor Intelligence, the industry may reach a valuation of $67.66 billion this year. By 2029, the space may be worth $204.35 billion.
In addition, VR isn’t just for gaming platforms though that’s currently the most common deployment. Rather, they can be used for important functions such as job training and simulations. With so much utility on hand, investors should focus on these virtual reality stocks.
Meta Platforms (META)
Once known exclusively for its social media network Facebook, Meta Platforms (NASDAQ:META) has evolved into one of the most important technology players. In particular, it’s a top-tier name for virtual reality stocks. Of course, with Meta’s strong pivot to the metaverse – a digitalized interactable environment – focusing on VR hardware made sense.
In particular, Meta’s Oculus division – which has produced VR headsets like Rift and Quest – set the benchmark for immersive gaming experiences. As well, they can deliver virtual social interactions, again pointing to the tech firm’s metaverse pivot. Further, Meta is also working on productivity applications with its virtualized solutions.
Analysts are of course digging what the company has been cooking up. They anticipate fiscal 2024 revenue to hit $158.2 billion, up 17.3% from last year’s print of $134.9 billion. In 2025, they believe sales can reach over $178 billion, up 12.5% year-over-year.
Lastly, covering experts rate shares a consensus strong buy with a $528.80 price target, implying 7% growth. The high-side estimate calls for $575, making META one of the top virtual reality stocks to consider.
Microsoft (MSFT)
When it comes to the intersection of technology and immersive experiences, we can’t leave out Microsoft (NASDAQ:MSFT). Generations ago, Microsoft used to be known just for its Windows operating system and ubiquitous business software. However, with the company’s Xbox video game console and its buyout of video game developer Activision Blizzard, it’s been pushing its weight around the virtualization space.
To be fair, Microsoft is more of a hybrid investment rather than a pure candidate for virtual reality stocks. For example, its Microsoft HoloLens is particularly compelling for its mixed reality solutions. It has significant implications for training and planning purposes in the fields of manufacturing, engineering, construction, healthcare and education.
For fiscal 2024, analysts anticipate revenue to land at $244.29 billion. That would be 15.3% up from last year’s print of $211.91 billion. And in 2025, we may see another strong performance with sales coming in at $279.31 billion.
Analysts peg shares a strong buy with a $469.34 price target, implying 13% growth potential. The most optimistic target calls for shares reaching $600.
Unity Software (U)
A video game software development company, Unity Software (NYSE:U) is the riskiest idea on this list of virtual reality stocks. Since the start of the year, U stock suffered a loss of almost 33%. In the past year, it expended a lot of energy to go practically nowhere. And in the past five years, the security suffered a loss of nearly 62%.
Unfortunately, the hits keep on coming, particularly in the guidance department. Recently, management stated that its first-quarter adjusted earnings will land between $45 million to $50 million. That’s well below the $113 million analysts anticipated. Also, sales will fall somewhere between $415 million and $420 million. In contrast, experts were looking for $534 million.
Still, the positive is that Unity’s development platform enables the designing, prototyping and deployment of applications across multiple mediums, including PC, console, mobile and VR headsets. So, if the worst of U stock is over, then it could potentially hitch a ride on the burgeoning virtualized ecosystem.
Analysts are generally giving Unity the benefit of the doubt, rating shares a moderate buy. Also, the average price target is $32.46, implying 24% upside potential.
On the date of publication, Josh Enomoto 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.
